US OPEN: Wall Street sentiments sinks facing recession fears

• Wall Street started today's session with declines
• The ADP report came out surprisingly weak, confirming that the U.S. economy and labor market are slowing down
• ISM index for services performed poorly signaling a weakening economy
• AI and semiconductor stocks lose after Japan decision and Joe Biden comments

Wall Street sentiment at the opening is rather pessimistic. ADP data showed that the labor market slowed noticeably (145k vs. 210k expectations and 242k previously) which investors took as a warning of a possible hard landing scenario. The weak ADP may provide a forecast for the main NFP reading, on Friday. Meanwhile, the ISM services index came in at 51.2 points with expectations of 54.5 and with 55.1 previously. According to comments from the Fed's Mester, the Federal Reserve is likely to raise rates again in May, although this is not yet a foregone conclusion in light of the weak data.

In addition to the wave of weaker macro data, we are also seeing declines from companies in the banking sector, where First Republic's decline and weak sentiment on the stocks of the largest U.S. banks are once again spooking. JP Morgan CEO Jaimie Dimon stressed that the effects of declining confidence in banks could be on the economy and last for years, and that the current crisis has not yet been fully resolved. Optimism on technology stocks further declined in the face of the prospect of increasingly widely discussed regulations on the development of artificial intelligence and trade blockades targeting China in the semiconductor market.

Stocks from the S&P 500 index categorized by sector and industry. Size represents market capitalization. The mood in the pharmaceutical sector is overwhelmingly positive, technology companies in the semiconductor industry are seeing a sell-off. Source: xStation5

US100 loses at the beginning of the session but bulls can fight back. The bulls failed to break above the SMA200 (red line) making an imminent test of 13,000 points, where the 23.6 Fibonacci abolition of the upward wave, initiated in mid-March, runs, not out of the question. Source: xStation5

News

After a huge rally, Nvidia (NVDA.US) shares are giving back gains as Alphabet (GOOGL.) indicated that its supercomputer is exceeding the performance of A100 chips. In addition, the wide-ranging debate over AI sector regulation that has begun, supported by Joe Biden's comments, may limit demand for the company's semiconductors. These products were to be supplied on a large scale to companies developing 'machine learning' algorithms, which require enormous computing power. Along with the huge jump in Nvidia's stock, the fundamental valuation has also risen, with a P/E ratio exceeding 150 points.

Nvidia (NVDA.US) shares opened today with a downward gap. The stock reacted with a decline near the 23.6 Fibonacci retracement of the upward wave initiated in March 2020, making a test of the 38.2 retracement, at $230 per share, still possible. Source: xStation5

C3.AI (AI.US) shares are falling on a wave of general weaker sentiment around the threatened slowdown in artificial intelligence. Also contributing to the declines was a report from the company's hedge fund Kerrisdale Capital, which pointed to a problem with the company's accounting documents and financial reports.  

Dutch Bros (BROS.US) gains as Wedbush analysts raised their recommendation for the drive-thru beverage store operator to optimistic from neutral, highlighting a realistic, conservative and positive EBITDA outlook.

Exxon (XOM.US) loses 0.3% as the largest U.S. oil producer indicated that first-quarter profit suffered by
as much as $1.8 billion due to falling oil and gas prices.

Johnson & Johnson (JNJ.US) gains because the drugmaker has tentatively agreed to pay $8.9 billion to resolve lawsuits over its talc-based products. Analysts note that the amount is lower than expected.