Asia-Pacific market briefing – Nasdaq 100 Sinks With Tesla as Treasury Yields Soar Volatility roared back to life as risk aversion struck Wall Street
Asia-Pacific market briefing – Nasdaq 100 Sinks With Tesla as Treasury Yields Soar
Volatility roared back to life as risk aversion struck Wall Street in the first trading session after the Christmas holiday break. This is in line with historical performance in the days leading into and after the holiday since 1990. The tech-heavy Nasdaq 100 sank about 1.4 percent, with the S&P 500 falling about 0.4%. Meanwhile, the blue-chip-oriented Dow Jones was left mostly unchanged.
Clearly, tech stocks were disproportionately impacted on Tuesday. A look at the market pricing of where the Federal Reserve might take interest rates ahead can explain this dynamic. Traders boosted rate hike projections across tenors since Thursday, with the most coming from the 2-year outlook. Treasury yields gained across the board, pushing the 10-year rate to its highest since the middle of November.
Meanwhile, Tesla’s stock was caught in the crossfire. While tech stocks were sinking, traders also had to deal with an announcement that Tesla is planning on reducing production at its Shanghai plant. That sparked concerns about demand despite China increasingly reversing its Covid-zero policy. The country announced that it will end quarantine for incoming travelers.
Tesla’s share price sank 11.41% on Tuesday in the worst drop since April 2022. This means that since the November 2021 peak, the stock has lost about 73% in value. No longer does its market capitalization tower over the combined total of its top 5 competitors like it used to – see chart below. While Tesla’s market cap sank 72%, its top 5 competitors declined about 31% since last year.
Tesla no longer towers over competition like before
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