The Nasdaq led a mixed trading day on Thursday as Tesla’s (TSLA) surprisingly solid results and high-flying sales forecast lifted hopes for a strong earnings season. But the Dow extended losses, continuing a sharp sell-off from the day before, as IBM (IBM) shed over 6% following a third-quarter revenue miss.
The tech-heavy Nasdaq Composite (^IXIC) gained about 0.8%, while the benchmark S&P 500 (^GSPC) closed up roughly 0.2% after dipping into the red earlier in the session. The Dow Jones Industrial Average (^DJI) recovered from steeper losses but still fell nearly 150 points, or about 0.3%.
Tesla kicked off “Magnificent Seven” earnings by posting its biggest quarterly profit in over a year. Shares in Tesla surged more than 20% — its best day since May 9, 2013 — as investors welcomed CEO Elon Musk’s forecast that EV sales could grow 20% to 30% next year. But the EV maker’s rally largely failed to extend to the other megacaps.
Elsewhere in corporates, Boeing (BA) shares sagged around 1% after striking workers rebuffed its pay deal on the heels of the plane maker’s $6 billion quarterly loss. It’s the latest in a string of rough news for stocks on the Dow.
Meanwhile, the 10-year Treasury yield (^TNX) fell back after topping 4.25% on Wednesday amid worries that the Federal Reserve won’t cut interest rates as quickly as anticipated. The yield dropped to just around 4.20%.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Official data released before the open showed the number of jobless claims unexpectedly fell to 227,000 last week, compared with an upwardly revised 242,000 the week before. Filings have seen volatility in states recently hit by hurricanes.
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Nasdaq, S&P 500 close higher after Tesla nabs best day in decade
Tesla (TSLA) earnings boosted both the Nasdaq and benchmark S&P 500 on Thursday, after the EV maker secured its best day in over a decade following a surprisingly strong Q3 earnings report.
The tech-heavy Nasdaq Composite (^IXIC) gained about 0.8%, while the benchmark S&P 500 (^GSPC) closed up roughly 0.2% after dipping into the red earlier in the session. The Dow Jones Industrial Average (^DJI) recovered from steeper losses but still fell nearly 150 points, or about 0.3%.
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The fundamental auto story, not AI goals, drives a big day for Tesla stock
It’s no secret that Tesla (TSLA) is a volatile stock.
As I put it on Yahoo Finance’s Morning Brief broadcast show Wednesday morning, trading at a valuation far above both its tech and automotive peers, the company sometimes feels like it trades more on “pie on in the sky ideas” than its fundamental auto business.
And the past few quarters of market action have backed that up. Entering Wednesday’s print Tesla’s stock had fallen by 9% or more the day following earnings in five of the past six quarters.
As margins declined and earnings disappointed, when investor focus shifted from the long-term pitch Elon Musk often flaunts to the actual business, things hadn’t gone well. Even after rallying on hype leading into its recent robotaxi event, Tesla stock sank nearly 10% following its big AI pitch.
That narrative flipped on its head Thursday. Tesla grew adjusted EBITDA margins for the first time in more than a year. Earnings surprised to the upside too. The stock rallied more than 20%.
“As investors struggle with the business model shift from auto to AI, this print reminds us growing the auto business profitably remains a high priority,” Morgan Stanley analyst Adam Jonas wrote in a note to clients on Thursday.
And for investors, the market action reminds us even a stock like Tesla that seems to trade on a million ideas at once can use a little help from the fundamental investor story sometimes.
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Jamie Dimon has yet to endorse a presidential candidate. And it’s unlikely he will.
All eyes have been on JPMorgan Chase (JPM) CEO Jamie Dimon — and whether or not he’ll have a role in either presidential candidate’s administration.
But the executive has yet to offer an official endorsement, and with less than two weeks until the election, it’s unlikely he will.
Yahoo Finance’s David Hollerith and Ben Werschkul have the story:
In a conversation Thursday at a conference hosted by the Institute of International Finance in Washington, Dimon discussed the importance of collaboration in politics. But he said nothing about either Kamala Harris or Donald Trump.
One source close to Dimon said he hasn’t given a full-throated endorsement of either presidential candidate publicly or privately but has favored Harris in private conversations, as the New York Times reported earlier this week.
That doesn’t mean he agrees with the vice president on everything, this source added.
Dimon has at least one more public appearance before Election Day, and the scrutiny of his views has intensified as stewardship of the economy remains one of the top issues in a tight election.
The Harris and Trump campaigns both declined to comment this week on Dimon and a possible endorsement, but Trump senior adviser Brian Hughes previously told Yahoo Finance in a statement that both Dimon and former President Trump “share support of common sense policies.”
JPMorgan Chase CEO and Chairman Jamie Dimon gestures as he speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, U.S., December 6, 2023. REUTERS/Evelyn Hockstein (REUTERS / Reuters) -
Sector Watch: Consumer Discretionary leads the day
Here’s a look at the sector action today, with gains led by Consumer Discretionary (XLY) after one of its key stocks — Tesla (TSLA) — surged a whopping 20%-plus following the company’s surprise earnings beat.
The XLY was far and away the biggest “outperformed” sector of the day, jumping around 3%. Real Estate (XLRE) followed with a much more modest jump of around 0.3%.
The biggest laggard? Materials (XLB), down around 1.2%.
Source: Yahoo Finance -
TKO Group stock falls on news it will acquire three businesses from Endeavor Group
TKO Group (TKO), the holding company of WWE and UFC, announced Thursday it’s acquiring three sports assets from Ari Emanuel’s Endeavor Group (EDR), which also owns a majority stake in TKO.
The three businesses — which include Professional Bull Riders (“PBR”), OnLocation, and IMG — will be purchased in an all-equity transaction valued at $3.25 billion.
PBR, the world’s largest bull riding league, represents a new sports play for TKO but the other two purchases signal a shift in strategy, as they are only sports-adjacent businesses.
OnLocation is a premium event experience platform, and IMG is a sports content distributor.
“The strategic acquisition of these sports and hospitality assets from Endeavor expands TKO’s operational footprint in the fast-growing premium sports market and enables direct participation in the upside from partner leagues and events,” the companies said in a joint statement
Shares of TKO fell as much as 9% on the news, which Wall Street analysts mostly expected.
“We suspect the Street may not like this transaction because it has the potential to muddy TKO’s relatively clean story [as a pure play sports company],” Citigroup analyst Jason Bazinet wrote in a note to clients. “However, we estimate the downside to the equity [should] be muted [likely in the low-single digit range].”
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Mortgage rates climb…again
Mortgage rates climbed for the fourth consecutive week to hit their highest levels since August.
Yahoo Finance’s Claire Boston reports:
The average 30-year fixed interest rate crept up to 6.54% in the week through Wednesday, according to Freddie Mac data. Last week, it averaged 6.44%.
Fifteen-year mortgage rates also climbed to 5.71%, up from 5.63%.
Mortgage rates have been mirroring an increase in Treasury yields in recent weeks. The 10-year Treasury, which most closely matches mortgage rates, yielded 4.2% on Thursday after nearing the highest levels since July a day earlier.
“Over the last few years, there has been a tension between downbeat economic narrative and incoming economic data stronger than that narrative. This has led to higher-than-normal volatility in mortgage rates, despite a strengthening economy,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
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S&P 500 turns negative, Dow falls 300 points to session low
The S&P 500 (^GSPC) turned negative by midday trading, down almost 0.2%. The Dow Jones Industrial Average (^DJI) fell more than 250 points to a session low.
Tesla’s (TSLA) stock surged more than 18% after better-than-expected quarterly results, helping maintain the tech-heavy Nasdaq Composite (^IXIC) in green territory.
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Bitcoin hovers above $67,000, crypto stocks gain
Bitcoin (BTC-USD) gained more than 2% on Thursday to hover above $67,000 per token. The cryptocurrency, which trades around the clock, rebounded after declining on Wednesday.
Crypto-related stocks also gained on Thurday. MicroStrategy (MSTR) and Coinbase (COIN) were among some of the biggest movers, rising more than 7% and 3% respectively.
Crypto related stocks gained on Thursday -
New home sales rose in September as rates eased during the month
Housing activity for new residential construction picked up in September as mortgage rates eased during the month.
Sales of new homes rose 4.1% in September to a seasonally adjusted rate of 738,000 units, up from August’s revised rate of 709,000, according to the Census Bureau data released on Thursday. That exceeded Bloomberg consensus expectations for a pace of 720,000.
September brought better news for the housing market. The Fed cut its benchmark rate by half a percentage point last month. The Fed doesn’t set mortgage rates, but they are often influenced by the Fed’s monetary policy decisions. Mortgage rates fell to the lowest since February 2023 ahead of the Fed decision. They have since picked up.
The uptick in sales activity last month also reflects how lower rates have encouraged many builders to sweeten the deal for house hunters who face affordability challenges.
PulteGroup (PHM) CEO Ryan Marshall told investors and analysts on the earnings call this week, “Given the high cost of homeownership, rate buydowns remain a powerful incentive in helping consumers bridge the affordability gap.”
Still, would-be buyers are dealing with high home prices. Last month, the median sales price of new homes rose to $426,300 from $410,900 in August.
And not all parts of the housing market appear to be picking up. Separate data released Wednesday showed that sales in the existing home market slumped to the lowest level since 2010 during the month of September.
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US economy growing at an ‘encouragingly solid pace’ in October
Fresh data out Thursday showed the US economy remains on track to grow at a solid pace through the end of 2024.
S&P Global’s flash US composite PMI, which captures activity in both the services and manufacturing sectors, came in at 54.4 in September, down from 54.6 in August. Economists had expected the index to tick down to 54.3.
Chris Williamson, the chief business economist at S&P Global Market Intelligence, said the data shows the US economy’s growth is chugging along to start the fourth quarter.
“October saw business activity continue to grow at an encouragingly solid pace, sustaining the economic upturn that has been recorded in the year to date into the fourth quarter,” Williamson said in the release. “The October flash PMI is consistent with GDP growing at an annualized rate of around 2.5%.”
Williamson added that sales are being stimulated by “competitive pricing,” which led the selling price inflation for goods and services down to the lowest level since May 2020.
“These weaker price pressures are consistent with inflation running below the Fed’s 2% target,” Williamson said.
This upbeat outlook falls in line with the strong projections market participants currently have for the third quarter gross domestic product (GDP) print. After a strong September jobs report and several better-than-expected retail sales prints, the economics team at Goldman Sachs is currently projecting the US economy grew at an annualized pace of 3.1% in the third quarter.
Meanwhile, the Atlanta Fed’s GDPNow model projects the US economy grew at an annualized pace of 3.4% in the third quarter.
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In non-Tesla news…
The Big Food M&A vibes continue into year end.
Keurig Dr. Pepper (KDP) is spending about $1 billion to buy energy drink maker Ghost. It makes sense given the growth in the category. What doesn’t make sense is why Coca-Cola (KO) and PepsiCo (PEP) haven’t purchased the rest of the stakes they own in Monster (MNST) (Coke) and Celsius (CELH) (PepsiCo).
Here is some thinking into new CEO Tim Cofer’s strategy at KDP from when he last hopped on Yahoo Finance in late March. I suspect he is just getting started on the deal front.
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Tesla’s latest results show company still cares about selling autos, Morgan Stanley says
Tesla’s (TSLA) recent emphasis on its lofty, somewhat vague AI ambitions, highlighted in its recent robotaxi event on Oct. 10, may have sent the stock down — but Morgan Stanley said the company’s latest earnings showed it’s still focused on revving up its auto business, which accounts for 80% of Tesla revenue.
“As investors struggle with the business model shift from auto to AI, this print reminds us growing the auto business profitably remains a high priority,” Morgan Stanley’s Adam Jonas wrote in a note to investors. He pointed to CEO Elon Musk’s comments about targeting 20% to 30% growth in electric vehicle deliveries in 2025 while focusing on lowering costs and bringing its internally produced 4680 batteries to scale.
Shares of Tesla jumped 17% after the opening bell a day after the results were released, adding tens of billions of dollars to its market cap.
Morgan Stanley analysts see shares rising to $310 over the next 12 months and reiterated their Buy rating on the stock.
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Tesla earnings lead market bounce back
The Nasdaq (^IXIC) jumped on Thursday to lead a rebound in US stocks as Tesla’s (TSLA) surprisingly solid results and high-flying sales forecast lifted hopes for a strong earnings season.
The Dow Jones Industrial Average (^DJI) fell more than 100 points, or nearly 0.3%. The tech-heavy Nasdaq Composite gained about 0.6%, leading the way down, while the benchmark S&P 500 (^GSPC) added more than 0.2%.
Tesla kicked off “Magnificent Seven” earnings with its biggest quarterly profit in over a year, driving a wave of optimism that set stocks up for a comeback from Wednesday’s sharp losses. Shares rose more than 15% at the open.
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Boeing stock poised to open lower after union rejects contract offer
Boeing stock (BA) was down nearly 3% in premarket trading after machinist union workers voted late Wednesday against the plane maker’s latest contract offer. The outcome means the current strike will continue.
The proposed agreement included a 35% general wage increase across four years, though without the defined-benefit pension plan the union wanted.
The strike, which started on Sept. 13, is an ongoing challenge for struggling Boeing, which on Wednesday posted a quarterly loss of more than $6 billion.
Earlier this month, Boeing said it would cut its workforce by 10%, or roughly 17,000 jobs, and delay the first delivery of its 777X jet to 2026.
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Initial jobless claims decline more than expected
A weekly reading on initial jobless claims released on Thursday morning came in at 227,000, versus estimates of 242,000, per a Bloomberg survey.
The print released by the Department of Labor showed an unexpectedly sharp decline in claims compared with the prior week’s upwardly revised 242,000 amid recent volatility in filings due to Hurricane Helen and Milton.
Continuing jobless claims rose by 28,000 to 1.89 million.
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Tesla stock soars
Tesla (TSLA) stock jumped over 13% premarket Thursday morning, adding tens of billions of dollars in market cap to the Elon Musk-helmed electric vehicle company.
Yahoo Finance’s Pras Subramanian reports that Tesla beat analysts’ expectations on adjusted earnings per share and higher gross margins. Musk said he expects the company’s vehicle deliveries will grow 20% to 30% next year. Still, its revenue missed expectations. Here are the details of its third quarter results compared to Wall Street’s forecasts, according to Bloomberg consensus estimates:
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Adjusted EPS of $0.72 vs. $0.60 expected
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Revenue of $25.18 billion vs. $25.4 billion
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Gross margin of 19.8% vs. 16.8% expected
Read the full story here.
Tesla stock has had a rocky few months riddled with ups and downs. The stock surged in anticipation of the company’s third quarter EV deliveries report and robotaxi event but fell when those mile marks disappointed. The company missed Wall Street estimates for third quarter deliveries in early October.
Wall Street analysts harshly criticized the company’s robotaxi event, saying the company’s self-driving taxi plans were too vague and “light of real numbers and timelines.”
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Good morning. Here’s what’s happening today.
Economic data: Initial Jobless & Continuing Claims, (week ending Oct. 19, week ending Oct. 12); S&P Global US Manufacturing & Services PMI (October preliminary); New Home Sales (September); Kansas City Fed Manufacturing Activity (October); Chicago Fed National Activity Index (September).
Earnings: UPS (UPS), American Airlines (AAL), Southwest (LUV), Dexcom (DXCM), Deckers Outdoor Corporation (DECK), Skechers (SKX), Coursera (COUR), Dow Inc. (DOW), Honeywell International (HON), Union Pacific Corporation (UNP), Hasbro (HAS), Northrop Grumman Corporation (NOC), Capital One (COF), Beyond, Inc. (BYON)
Here are some of the biggest stories you may have missed overnight and early this morning:
Tesla jumps after earnings surprise, upbeat outlook
Boeing stock falls after workers reject latest labor offer
American Airlines lifts 2024 profit forecast
Southwest reaches agreement with activist, ending long battle
How Musk’s ‘distractions’ could turn into big wins
IBM stock falls amid slowing spending on non-GenAI projects
Consumers are better off than in 2019, but they don’t feel that way
