On Friday, the stock secured its sixth consecutive week of wins as Netflix’s (NFLX) strong earnings lifted the entire tech sector. Now, attention has shifted to another name in the Magnificent Seven, with electric car maker Tesla (TSLA) set to report quarterly results on Wednesday.
The Dow Jones Industrial Average (^DJI) led the market rally, gaining about 1% over the past week. The benchmark S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite Index (^IXIC) followed, securing weekly gains of about 0.9% and 0.8%, respectively.
Both the Dow Jones and S&P 500 hit record highs throughout this week.
Meanwhile, utilities (XLU) rose 3.4% this week to end five days of trading, followed by real estate (XLRE) and financials (XLF), leading to a shift away from mega-cap tech stocks and into other areas of the market. rotation was observed. This was an increase of 3% and 2.4%, respectively. Small-cap stocks also outperformed the major indexes, with the Russell 2000 (^RUT) ending the week up about 2%.
The market move comes as big tech giants like Apple (AAPL) and Amazon (AMZN) are still waiting to release their earnings, with investors enjoying a particularly strong start to the earnings season. It is.
So far, 79% of S&P 500 companies have reported unexpectedly strong results in the third quarter, which is higher than the overall average over the past five years, said John Butters, senior earnings analyst at FactSet. This exceeds 77% of the total.
The earnings season party continues this week, with reports from Tesla, Boeing (BA), General Motors (GM), American Airlines (AAL), UPS (UPS) and more highlighting a busy calendar.
Beyond profits, investors are also watching a slew of economic data, including the University of Michigan’s final measure of consumer sentiment to be released on Friday. The Fed Beige Book, scheduled for release on Wednesday, will provide a new look at current economic conditions across the Fed’s 12 districts.
The housing market will also be a top concern, with mortgage rates rising for the third consecutive week and the 30-year fixed rate approaching 6.5%.
In addition to weekly updates on unemployment claims, there will also be a review of activity in the service and manufacturing sectors.
Can Tesla drive strong revenue growth?
Tesla is scheduled to report its quarterly results on Wednesday, following its highly anticipated “We, Robot” event on October 10th.
Wall Street analysts surveyed by Bloomberg expect the EV giant to post adjusted earnings of $0.60 per share on revenue of $25.42 billion. Global car deliveries improved quarter-on-quarter for the first time this year, and auto gross profit margins may rise, which should help boost profits in the quarter.
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However, investors remain nervous about the company’s future investments after last week’s robotaxi announcement fell short of expectations.
Tesla’s robotaxi exhibited at a launch event in Los Angeles, California, USA on October 10, 2024. (Screenshot, distributed via Tesla/Reuters) (Reuters/Reuters)
In a note to clients after the event, Jefferies analysts called the $30,000 driverless robotaxi called CyberCab a “toothless taxi,” and said Tesla has “ambitious goals.” “There is little evidence of its feasibility,” he added.
The new CyberCab is designed to be fully autonomous, with no steering wheel or pedals. Production is expected to begin “by 2027,” according to CEO Elon Musk, and is likely to be a big topic of earnings announcements.
“Investors may want more details about Tesla’s sub-$30,000 car rollout,” Bloomberg Intelligence analyst Steve Mann wrote Friday. “For high-volume sales, automakers may need to incorporate traditional features such as a steering wheel and pedals into the CyberCab.”
Tesla stock has been volatile in recent months, having fallen about 10% since the beginning of the year.
Consumer check, labor check
Retail sales for September were slightly above consensus expectations from early last week, showing that the U.S. economy remains strong. But investors will be watching for more data with the final release of the University of Michigan Consumer Confidence Index scheduled for Friday.
After the index unexpectedly dropped to 68.9 in September for the first time in three months, sentiment is expected to rise to 69.5 in October’s final reading.
According to the University of Michigan, despite subdued inflation statistics, consumers continue to express dissatisfaction with high prices. This was offsetting a more optimistic view of the job market, which remains a key focus for the Fed after cutting interest rates by 50 basis points at its last meeting.
Markets are currently pricing in another 25 basis point rate cut in November, but Fed officials appear to be divided on the path forward.
San Francisco Fed President Mary Daly said earlier this week that one or two more rate cuts this year would still be a “reasonable move” if inflation pressures continue to decline and the job market remains strong. .
“The work to achieve a soft landing is not completely finished,” Daly said in a speech Tuesday. “We are determined to get the job done.”
But the day before, Federal Reserve President Chris Waller said in a speech at Stanford University that central banks needed to be more cautious about interest rates, saying, “The data shows that the economy is not slowing as much as expected.” It shows potential.” ”
Another round of jobless claims scheduled for Thursday will come under close scrutiny after the number of people applying for unemployment benefits in the week ending October 12 has returned to normal.
U.S. unemployment claims fell by 19,000 to 241,000, but economists blamed the fallout from Hurricanes Helen and Milton in the Southeast, as well as the Boeing labor strike. The government warns that this could lead to distortions in the labor market in the short term.
“Hurricanes Helen and Milton and the Boeing strike are beginning to skew the economic data, but given the timing of these storms (Helen made landfall on September 26th and Milton on October 10th), the data The most significant impact is yet to come,” Oxford Economics wrote in a note on Friday.
weekly calendar
Monday:
Economic data: September economic leading index (forecast -0.3%, previous -0.2%)
Revenue: SAP SE (SAP), Nucor Corporation (NUE), HBT Financial (HBT), Zions Bancorporation (ZION), Nucor Corporation
Tuesday:
Economic data: October Philadelphia Fed Non-Manufacturing Business Index (previously -6.1). Richmond Fed Manufacturing Business Index for October (previously -21). Richmond Fed Business Conditions (Previous-3)
Revenue: General Motors (GM), 3M Company (MMM), RTX Corporation (RTX), Verizon Communications (VZ), GE Aerospace (GE), Lockheed Martin (LMT), Quest Diagnostics (DGX), Philip Morris (PM), Denny’s Corporation (DENN), Sherwin-Williams (SHW), Interpublic Group of Companies (IPG), Norfolk Southern Corporation (NSC), RTX Corporation (RTX), Texas Instruments (TXN), PulteGroup (PHM), Enphase Energy (ENPH )
Wednesday
Economic data: MBA home loan applications, week ending October 18 (-17.0% last week). Existing home sales in September (estimated at 3.88 million units, previously 3.86 million units). federal reserve beige book
Revenue: Tesla (TSLA), Boeing (BA), AT&T (T), IBM (IBM), Coca-Cola (KO), GE Verona (GEV), T-Mobile (TMUS), Las Vegas Sands (LVS), Hilton Worldwide Holdings (HLT), Whirlpool Corporation (WHR), Mattel (MAT), CME Group (CME), General Dynamics (GD), ServiceNow (NOW), Viking Therapeutics (VKTX)
Thursday
Economic data: New jobless claims for the week ending October 19 (expected 240,000, previously 241,000). Recurring claims, week ending October 12 (previously 1.87 million). S&P Global U.S. Manufacturing PMI, October preliminary figure (forecast 47.5, preliminary value 47.3). S&P Global US Services PMI, October preliminary value (forecast 55.2, preliminary value 55.2). New home sales in September (expected 720,000 units, previously 716,000 units). Kansas City Fed Manufacturing Activity, October (Pre-8). Chicago Fed National Activity Index, September (previously 0.12)
Revenue: UPS (UPS), American Airlines (AAL), Southwest (LUV), Dexcom (DXCM), Deckers Outdoor Corporation (DECK), Sketchers (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)
Friday
Economic data: Durable goods orders, September preliminary figures (forecast -1.0%, preliminary value 0.0%). Durable goods (excluding transportation industry), preliminary figures for September (forecast -0.1%, advance value 0.5%). University of Michigan Consumer Sentiment, October final (69.5 expected, 68.9 advance). Kansas City Fed Service Activity, October (-2 ago)
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