Wall Street Juggles Earnings as Tesla Up, IBM Down: Markets Wrap
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(Bloomberg) — Stocks fluctuated, with traders parsing a slew of corporate results for clues on the health of the world’s largest economy. Treasuries rebounded after days of losses.
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A gauge of the “Magnificent Seven” headed toward a three-month high, with Tesla Inc. up 19% after Elon Musk’s electric-vehicle giant reported strong earnings and forecast as much as 30% growth in car sales next year. United Parcel Service Inc. — a barometer of economic activity — jumped 5% after returning to sales and profit growth. A slide in International Business Machines Corp., Honeywell International Inc. and Boeing Co. shares weighed on the broader market.
“Despite the possibility of more volatility as we get deeper into earnings season and close in on the November election, the market’s longer-term outlook remains solid,” said Daniel Skelly at Morgan Stanley’s Wealth Management Market Research & Strategy team.
The market barely budged after Thursday’s economic data, with new home sales beating estimates, initial jobless claims dropping and business activity expanding at a solid pace.
“Goldilocks data that’s in-line with expectations (so not too good or too bad) is the best outcome for a continued rebound in stocks and bonds,” said Tom Essaye at The Sevens Report.
The S&P 500 was little changed. The Nasdaq 100 climbed 0.6%. The Dow Jones Industrial Average dropped 0.5% — poised for a fourth consecutive day of losses — the longest losing streak since June.
Treasury 10-year yields declined five basis points to 4.20%. Thursday’s $24 billion five-year TIPS auction is poised to draw the lowest auction yield in more than a year as inflation-protected Treasuries have outperformed since the Federal Reserve cut rates last month.
Oil slipped as oversupply concerns overshadowed the possibility of an Israeli retaliatory strike on Iran. Palladium surged as the US asked the Group of Seven allies to consider sanctions on Russian exports of the precious metal.
“The market appears to be driven by the projected outcome of the earnings reporting period, the presidential election, and the bond market’s interpretation of future monetary actions by the Federal Reserve,” said Sam Stovall at CFRA. “Investors see the resiliency of the economy and employment forcing the Fed to be ‘slower to lower’ on rates. We still see two 25 basis-point rate cuts in 2024.”
This week’s equity slide did little to dent the wall of bullish technical signals built up around the S&P 500. The US stock benchmark continues to trade comfortably above its 200-day moving average, clocking more than 240 straight days above the closely watched long-term line.
In the prior 13 instances when the S&P 500 closed above its 200-day average for at least 242 consecutive days, with the index less than 3% below a record, the gauge proceeded to post a median gain of 7.2% in the next six months, advancing in all but two cases, SentimenTrader’s analysis found.
“Near term, pullbacks/profit-taking should be expected given the uncertainties around the upcoming US presidential election, geopolitical uncertainty, and the earnings parade,” said Craig Johnson at Piper Sandler. “No change to our 2024 year end S&P 500 price objective of 6,100.”
The overall sentiment of S&P 500 firms remains exceptionally positive, hovering at a 15-year high as inflation recedes, the economy steadily grows, and the Fed begins its easing cycle, according to Frank Zhao and Mengmeng Ao at S&P Global.
“Over the past four earnings seasons, the overall sentiment of S&P 500 firms, a proxy for the US equity market and a barometer for the health of both the US and global economies, has ranked in the top 20% of all earnings seasons over the past 15 years,” they said. “This sustained optimism is primarily driven by the US economy progressing toward a ‘Goldilocks’ scenario, marked by steady growth and price stability.”
Firms in the financial, technology, and real estate sectors have driven this overall sentiment, they said.
Corporate Highlights:
American Airlines Group Inc. boosted its full-year profit guidance, highlighting progress rebuilding from a failed sales strategy while it grapples with persistently high costs.
Southwest Airlines Co. reported third-quarter profit more than double Wall Street’s estimates, a needed boost as the carrier tries to shore up financial results following a bruising fight with activist Elliott Investment Management that came to an end Thursday.
ServiceNow Inc. reported strong third-quarter sales and bookings as the software company expands its suite of AI tools.
Whirlpool Corp., the owner of Maytag, reported better than expected earnings, and reaffirming its full-year sales forecast.
Harley-Davidson Inc.’s motorcycle shipments fell in the latest quarter on lower demand for its high-margin bikes, prompting a downward revision in its full-year forecast.
Lam Research Corp. reported better-than-expected first quarter results. Analysts note that investors will welcome this report after ASML’s weak report earlier this month.
T-Mobile US Inc. reported more monthly mobile-phone and broadband subscribers that analysts expected, leading it to raise forecasts for new customers and earnings this year.
Newmont Corp. slumped after investors soured on earnings results that suggest the top gold producer is struggling to control mining costs and capitalize on surging bullion prices.
Key events this week:
Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 12:31 p.m. New York time
The Nasdaq 100 rose 0.6%
The Dow Jones Industrial Average fell 0.5%
The MSCI World Index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.2% to $1.0805
The British pound rose 0.3% to $1.2956
The Japanese yen rose 0.7% to 151.72 per dollar
Cryptocurrencies
Bitcoin rose 1.6% to $67,624.13
Ether rose 0.3% to $2,520.33
Bonds
The yield on 10-year Treasuries declined five basis points to 4.20%
Germany’s 10-year yield declined four basis points to 2.27%
Britain’s 10-year yield advanced four basis points to 4.24%
Commodities
West Texas Intermediate crude fell 0.8% to $70.19 a barrel
Spot gold rose 0.5% to $2,728.04 an ounce
This story was produced with the assistance of Bloomberg Automation.
