The earliest price action of 2023 in US equities found two growth heavyweights under pressure, but not from higher rates.

De-rating in growth stocks tied to rising bond yields was last year’s story. This year it’s about demand and, more to the point, the prospect of recession.

Apple took a hit after a Nikkei report suggesting the world’s most valuable company may be dialing back production added to concerns about a holiday quarter marred by disruptions at the world’s biggest iPhone plant. “China’s tech supply chain is heading into the new year facing the twin challenges of slumping demand and staffing chaos caused by Beijing’s abrupt U-turn on COVID controls,” staff writers for the outlet said. “In a sign of the gloomy outlook for consumer electronics, Apple has notified several suppliers to build fewer components for AirPods, the Apple Watch and MacBooks for the first quarter.”

The selloff triggered in part by Nikkei’s reporting helped push Apple’s market cap below $2 trillion, leaving the world without any publicly-traded $2 trillion companies (both Microsoft and Aramco fell below the $2 trillion mark last year).

“Macbook is important and a real slowdown there is potentially material,” an analyst at Mizuho cautioned. There was some chatter (unverified, obviously) about the possibility of an Apple pre-announcement. That’s speculation, but it may deter dip-buyers.

At the same time, Tesla tumbled the most since September 2020 following the release of quarterly delivery numbers which missed estimates. The gap between deliveries and production was the highest in at least 16 quarters.

Judging by some colorful email feedback, a few readers were aggrieved at the general tenor of Monday’s Tesla coverage. I imagine those folks were even more unsettled on Tuesday — the market plainly shares at least some of my concerns.

I’d gently implore readers not to shoot the messenger. I didn’t compel Elon Musk to buy Twitter, nor am I responsible for the controversy that ensued. He became the standard-bearer for America’s far-right of his own volition. To the extent that decision is exacerbating a slowdown in demand that’d be happening anyway as the economy decelerates, it’s his fault, no one else’s.

If that’s not the case, and demand is robust, then I suppose the fault resides with analysts for collectively overestimating Q4 deliveries, which did hit a record despite the miss to consensus. Analysts will be forgiven, though. After all, Musk teased an “epic end of year” on the Q3 call in late October. (He did preface that pseudo-prediction with a bit of healthy superstition: “Knock on wood.”)

At the same time, SpaceX is raising money at a $137 billion valuation. Andreessen Horowitz is leading the latest round. CNBC, which originally reported the news, gingerly noted that “Musk has repeatedly sounded off about geopolitical issues on Twitter,” before mentioning a CNET article documenting the plight of a US astronaut and two Russian cosmonauts currently stranded at the International Space Station. Their ship sprung a leak last month and it’s unclear whether the vessel is “spaceworthy.” According to a NASA blog post, SpaceX was consulted about a possible return mission. In the future, it’s likely that SpaceX and, by extension, Musk, will be entrusted to assist in such matters. I’ll just leave that there.

I think it’s fair to say Tuesday marked an inauspicious start for Wall Street in 2023, even as US shares attempted to trim losses later in the session. Demand jitters are likely to define the market and macro zeitgeist for the foreseeable future. “‘Bearish equities’ in 2022 was about the multiple destruction from the move in yields on the Fed’s impulse tightening, but in 2023, everybody is focusing on the earnings destruction to come thereafter,” Nomura’s Charlie McElligott said, in his first note of the new year. “Ironically, it was inflation which contributed to corporate earnings growth for those who had pricing power, but now, with [the] pricing tailwind fading against wages staying high [and] the perception of the consumer finally beginning to buckle ahead of anticipated layoffs, the earnings ‘hit’ is the consensus view,” he added.

If you ask Bill Dudley, though, any US recession would be a creation of the Fed, and thereby could be quickly reversed. “A recession is pretty likely just because of what the Fed has to do,” he told Bloomberg on Tuesday, referring to the inflation fight. “What’s different this time is that if we have a recession, it’s going to be Fed-induced and the Fed can end the recession by subsequently easing monetary policy.”

So, according to Dudley, the same Fed that’s still struggling to get inflation even a point or two lower after the most aggressive rate-hiking campaign in four decades, could simply snap its fingers and reverse any recession those rate hikes might eventually cause. That seems like wishful thinking to me. As Musk might put it, “knock on wood.”