While you were sleeping: Tesla leapfrogs Ford

Tuesday 4th April 2017

Wall Street declined amid disappointing US car sales and concern about President Donald Trump’s ability to deliver on promises that were seen as bolstering economic growth and corporate profits.

Shares of General Motors dropped, trading 3.8 percent weaker as of 2.30pm in New York, while those of Ford Motor slid, trading 2.4 percent lower, amid car sales that fell short of expectations.

Bucking the trend, however, shares of Tesla jumped to a record high, up 6 percent as of 2.22pm in New York, after it reported record-high deliveries. The gains pushed the market value of the electric-car maker above that of Ford.

“I don’t know if people want electric cars, but people want Tesla,” Ben Kallo, an analyst at Robert W Baird & Co, told Bloomberg. “I’m not an [Tesla CEO] Elon Musk worshiper, but people that would normally buy a Porsche are buying Teslas right now.”

In 2.26pm trading in New York, the Dow Jones Industrial Average fell 0.4 percent, while the Nasdaq Composite Index also slid 0.4 percent. In 2.10pm trading, the Standard & Poor’s 500 Index declined 0.5 percent.

The Dow weakened as declines in shares of DuPont and those of Caterpillar, down 1.7 percent and 1.1 percent respectively, outweighed gains in shares of UnitedHealth and those of Verizon Communications, up 0.7 percent and 0.4 percent respectively.

"It doesn't feel like the market is in panic, just that it is reassessing what the expectations were, and the expectations were we were going to get a lot of reforms quickly, and now it's clear that we're not," Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York, told Reuters.

In Europe, the Stoxx 600 Index finished the session with a 0.5 percent drop from the previous close. Germany’s DAX Index shed 0.5 percent, while the UK’s FTSE 100 Index declined 0.6 percent, and France’s CAC40 Index dropped 0.7 percent.

Reckitt Benckiser shares slipped 0.4 percent in London. The company, which recently acquired Mead Johnson Nutrition, said it’s considering a sale of its French’s Food business.

Reckitt will begin a review and consider all options for the "non-core" business, according to media reports. French’s Foods accounts for 4 percent of Reckitt Benckiser’s total revenue.

A possible price tag of 2 billion pounds, which the UK’s Sunday Times newspaper reported, would imply a multiple of about 16 times earnings before interest, taxes, depreciation and amortisation, according to Bloomberg.

While that’s above global food companies trading at 13.5 times on average, it’s “probably justified by the strong fundamentals,” Kepler Cheuvreux analyst Richard Withagen said in a note, Bloomberg reported.

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