Stocks waver after ISM Manufacturing hits weakest levels since 2020, Tesla’s disappointing record deliveries, Bitcoin liquidity dries up

Wall Street is trying to find its footing after a weaker-than-expected ISM manufacturing report countered OPEC’s surprise production cut that triggered inflation jitters. The S&P 500 index initially opened higher, led by the energy sector, healthcare, and consumer staples as traders rushed to buy anything energy and defensive. ​ Wall Street isn’t sure how much higher oil prices are going, but they are growing confident that the economy is weakening. ​ Treasury yields gave up all their OPEC+ output cut gains after factory activity plunged. The 10-year Treasury yield fell 6.7 basis points to 3.400%.

This current macro backdrop isn’t conducive for a meaningful stock market rally: The economy is recession bound as the consumer is clearly weakening, lending is about to get ugly, energy cost uncertainty will remain elevated for a while, and monetary policy is finally restrictive and about to break parts of the economy. ​

Bullard

Fed’s Bullard delivered his standard hawkish comments. ​ Bullard noted that the Fed needs rates above 5.00% and that his forecast is above the median. He added that it is an open question if the OPEC+ move will have a lasting impact. ​ ​ Fed rate expectations remain volatile, surging after the surprise OPEC+ production cut and then falling after very weak factory activity data. ​

ISM

ISM manufacturing activity dropped to the lowest level since May 2020. ​ The March factory activity reading of 46.3 was lower than both the prior reading of 47.7 and consensus estimate of 47.5. Everything in this report was weak. ​ Prices paid fell from 51.3 to 49.2, while employment plunged from 49.1 to 46.9. ​

Demand is falling off a cliff as new orders plunged from 47.0 to 44.3. ​ Inventories are contracting and demand continues to soften. ​

Tesla

Tesla shares are lower as record deliveries in the first quarter failed to meet Elon Musk’s 50% annual growth goal. ​ Tesla delivered 422,875 vehicles in the first quarter, a beat of the 421,164-consensus estimate. ​ Yes, Tesla had a strong start to the quarter and they did resort to aggressive pricing, but given the current macro backdrop, these results ultimately will be praised. ​ Tesla is securing its spot at the top and making sure it continues to ramp up production. ​

Crypto

Bitcoin is wavering as the cryptoverse tries to find new banking connections. ​ Losing Silvergate Capital and Signature Bank hurt crypto in so many ways, but right now the liquidity pains sting the most. ​ Kaiko’s Conor Ryder tweeted “BTC liquidity has dropped to 10-month lows as market makers lose access to USD payment rails.” ​

Bitcoin needs a bullish catalyst to break above the $30,000 level, but until some significant use case argument is made, prices could consolidate around the mid-$20,000s. ​

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