Wall Street slides after gloomy earnings led by Tesla

Major U.S. stock indexes ended lower on Thursday after disappointing quarterly reports from companies including Tesla and AT&T, while investors sought clarity on the path of interest rates.

Tesla shares tumbled 9.7% after the electric vehicle maker posted its lowest quarterly gross margin in two years and signaled it would continue to slash prices. AT&T shares dropped 10.4% after the wireless carrier missed market estimates for first-quarter revenue and free cash flow.

The S&P 500’s rally to start the year is set to be tested by a first-quarter earnings season that investors expect to show tepid results. So far, analysts have largely retained last week’s expectations of a near-5% year-on-year fall in quarterly profits at S&P 500 companies, according to Refinitiv data.

“The market has been overbought for the last week or two,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial. “Now that we are going to start the heart of earnings season, you are going to see that demand is slowing, corporate profits are coming down and there really isn’t a whole lot of catalysts to motivate buyers.”

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