Wall Street Slips as Recession Worries Resurface

U.S. stocks opened April on a cautious note following disappointing economic data exacerbating worries of a recession. The ADP's national employment report revealed a softer-than-expected rise in private payrolls, with only 145,000 jobs added in March, down from 261,000 in the previous month. Moreover, U.S. job openings slipped to 9.9 million in February. This is the lowest level since May 2021. The Labor Department also reported Friday that non-farm payrolls grew by 236,000 in March, slightly below market expectations. It’s a decline from the previous month's reading of 326,000. That combines with weaker factory orders. They fell for a second straight month.

The S&P 500 edged down 0.10% over the week, snapping a three-week winning streak while the tech-heavy Nasdaq composite shed 1.10%. The Dow Jones managed to stay above the flatline (up 0.63%) ahead of the Easter weekend.

In Europe, the MSCI EMU index slipped by 0.14%, while the FTSE index in the UK bucked the trend adding 1.44% over the week. In Asia, the Shanghai Composite gained 1.67% though the country’s manufacturing sector grew much less than expected in March. Japan’s Nikkei lost 1.87% due to a contraction in its manufacturing sector and slower capital expenditure among the country's largest firms in Q1. South Korea’s KOSPI was among the outperformers, rising 0.55% after data showed that inflation grew less than expected in March.

S&P sector indices end mixed

The week saw a widening performance dispersion between the best and worst-performing sectors of the S&P, marking a shift from the previous two weeks. Defensive corners of the market such as utilities (3.11%) and health care (3.08%) were in the ascendency. The energy sector also outperformed the broader market (up 3.03%) as oil prices rose for the third straight week (WTI crude oil up 6.65%) with industry data showing a fall in U.S. commercial crude oil inventories. Communications services fared well (up 2.33%) in the wake of Alphabet stocks (GOOG), up 4.71%. The parent company of Google revealed details about its artificial intelligence chips, claiming they are both faster and more power-efficient than comparable systems from Nvidia Corp.

By contrast, some sectors closely tied to the economy such as industrials and materials were the top losers on the S&P 500, down 3.37% and 1.26% respectively. Ditto for the consumer discretionary sector which suffered a decline of 2.95%, driven in part by Tesla's underwhelming sales results. The EV maker reported a modest 4% rise in sales for Q1 compared to the previous quarter, despite slashing prices on its vehicles. This is also the fourth straight quarter that Tesla has produced more vehicles than it has delivered to customers (deliveries of 422,875 vehicles and production of 440,808 cars). After a strong start to the year (up 50% year-to-date), Tesla stocks (TSLA) fell 10.80% for the week.