US stocks fall on GDP downgrade; Tesla slumps after Q4 deliveries miss

Investing.com– US stocks fell Thursday, erasing early gains after several security incidents in the United States over the last few days.

The fell 156 points or 0.4%, and the index lost 10 points, or 0.2%, while the  sank by 30 points or 0.2%.

The cautionary start to the year comes after the NASDAQ Composite rose over 28% last year, benefiting the most from an AI-fueled rally in technology stocks, the S&P 500 rose 23%, and the Dow Jones Industrial Average added just under 13%.

Atlanta Fed GDP downgrade

The Atlanta Fed GDPNow model has revised its growth estimate for the fourth quarter of 2024. The model now predicts a seasonally adjusted annual growth rate of 2.6%, down from the previous 3.1% forecast made on December 24.

The revision was announced toda and follows the recent data releases from the US Census Bureau. These data have led to a downward adjustment in the nowcast of fourth-quarter real gross private domestic investment growth. The estimate has been revised from a growth of 1.3% to a contraction of -0.7%.

This comes alongside slower than projected manufacturing growth from China. The combined effect of these factors appears to have contributed to the lowered growth expectations for the last quarter of 2024.

The Atlanta Fed GDPNow model provides a running estimate of real GDP growth in the current quarter.

Trump policy, Fed rate cuts to take focus in 2025

Trump’s economic and international policies are set to be the biggest point of focus in the coming month as he takes office later in January.

Trump has vowed to dole out largely expansionary policies but has also pledged hefty trade tariffs against major US trading partners such as China, Canada, and Mexico.

Uncertainty over Trump’s policies saw investors turn cautious in recent weeks, sparking some profit-taking after an initial rally on Wall Street in response to Trump’s election victory in early November.

Investors also fear that Trump’s policies could keep inflation elevated in the long term, inviting fewer interest rate cuts by the Fed.

The central bank recently flagged a slower pace of rate cuts in 2025, citing concerns over sticky inflation and a robust labor market.

Tesla slumps after Q4 deliveries

Tesla (NASDAQ:) stock fell over 6% after the EV manufacturer reported a record vehicle deliveries in the fourth quarter, the company said Thursday. However, deliveries came in below consensus expectations.

The electric vehicle giant said its deliveries in the quarter came in at 495,570, below the consensus estimate of 512,277. Tesla also produced approximately 459,000 vehicles during the quarter. 

Apple (NASDAQ:) is offering discounts on its latest iPhone models in China, a rare move that points to rising competition from domestic rivals in the world’s largest smartphone market. As a result, shares fell nearly 3% Thursday.

Apple is grappling with declining market share in the important Chinese market, with competition from local manufacturers becoming more intense.

Crude gains on China optimism

Crude prices rose Thursday, helped by declining US oil inventories, while traders cautiously eyed an economic recovery in China, the largest importer in the world.

By 16:00 ET, the US crude futures (WTI) climbed 1.9% to $73.11 a barrel, while the Brent contract rose 1.7% to $75.89 a barrel.

China’s Xi Jinping said on Tuesday in his New Year’s address that the country would implement more proactive policies to promote growth in 2025.

China’s grew in December, according to the private-sector Caixin/S&P Global survey on Thursday, but at a slower-than-expected pace. 

This echoed Tuesday’s official survey, and suggested policy stimulus is gradually trickling into the second largest economy in the world.

The  reported on Tuesday that US oil inventories fell by 1.4 million barrels last week.

Official data from the  is due later on Thursday, and a drop in US oil inventories tends to indicate an increase in demand for crude oil.

(Ambar Warrick. Sam Boughedda and Peter Nurse contributed to this article.)