Markets News, October 24: S&P 500, Nasdaq Rise as Tesla Surges; Dow Closes Lower for 4th Straight Day
· InvestopediaMajor U.S. stock indexes turned in a mixed performance on Thursday as investors digested a barrage of earnings reports from major companies.
The S&P 500 and Nasdaq Composite gained 0.2% and 0.8%, respectively, while the Dow Jones Industrial Average shed 0.3% and extended its losing streak to four consecutive sessions. The S&P 500 snapped a three-day losing streak, while the Nasdaq bounced back from a 1.6% decline yesterday that was sparked by a selloff in large-cap technology stocks.
Tesla (TSLA) shares led the charge on Thursday, rising 22% and recording their best day in a decade, after the EV maker reported better-than-expected earnings and said that plans for new, more-affordable models are "on track" for production to start next year.
Other large-cap tech stocks were mostly higher Thursday. AI investor darling Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META) and Amazon (AMZN) gained ground, while Apple (AAPL) inched lower.
Shares of United Parcel Service (UPS) rose 5.3% after the package delivery giant reported better-than-expected results on the top and bottom lines.
Shares of Dow component Boeing (BA) fell 1.2% after the plane maker's machinists late Wednesday rejected a new contract offer and extended a crippling six-week strike.
Fellow Dow member International Business Machines (IBM) plunged 6.2% after reporting quarterly revenue that came in below analysts' expectations. Honeywell (HON), another Dow component, dropped 5.1% after reporting disappointing results and cutting its sales outlook.
Investors were also digesting several economic indicators that were released this morning. Weekly jobless claims numbers came in lower than expected, while new-home sales were higher than anticipated. Market participants are closely watching the data as they seek confirmation that the U.S. economy remains on sound footing and look for information that could inform the Federal Reserve's decisions on interest rates.
The yield on 10-year Treasurys, which is tightly correlated with expectations around interest rates, fell to 4.21% from 4.24% yesterday. The yield has been on the rise, hitting levels not seen since late July in recent days, as the market has recalibrated its expectations for how aggressive the Fed will be in easing policy in the coming months.
Gold futures were up slightly, at around $2,750 an ounce, after hitting an all-time high of just above $2,770 on Wednesday. Bitcoin was trading above $68,000, near its highest levels of the week.
Biggest S&P 500 Movers on Thursday
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Advancers
- Tesla (TSLA) reported better-than-expected profits for the third quarter, and its shares powered 21.9% higher, outperforming all other S&P 500 stocks on Thursday. Although Tesla's revenue came in slightly shy of consensus forecasts, an expansion of Tesla's gross margin to 19.8% from 17.9% a year ago helped drive gains in net income. The company also reaffirmed its plans to launch a more affordable model, with production on track to begin in the first half of next year.
- Molina Healthcare (MOH) shares skyrocketed 17.7% following the health insurer's release of strong third-quarter financial results. The company's sales and profits topped analysts' forecasts, boosted by increased premium payouts for its government-backed Medicaid plans. Molina also reported a roughly 4% year-over-year increase in the number of people served through its Medicaid offerings.
- Shares of West Pharmaceutical Services (WST) popped 15.4% after the provider of drug delivery systems and packaging products beat third-quarter sales and profit forecasts. The company also lifted its guidance for full-year earnings per share (EPS), citing robust demand for cartridges and syringes used in storing and administering injectable therapies.
Decliners
- Thursday's weakest performance in the S&P 500 belonged to Newmont (NEM), the world's largest gold producer, with shares plunging 14.7% after the mining giant reported lower-than-expected revenue and adjusted earnings for the third quarter. Higher costs contributed to Newmont's lackluster performance. The company said its capital expenses rose 10% from the prior quarter, reflecting expansion projects in Australia and Argentina, while other assets acquired in last year's takeover of Newcrest Mining also contributed to escalating costs.
- Teradyne (TER), which provides testing systems and robotics solutions for semiconductor makers and other manufacturers, topped third-quarter sales and profit estimates. The firm also raised its guidance for the current quarter, citing strong demand for testing products from memory chipmakers and cloud-computing firms as they build out their artificial intelligence (AI) capabilities. However, Teradyne shares dropped 11% as analysts at TD Cowen cut their price target on the stock to $142 from $150, citing the company's higher-than-anticipated projections for operating expenses over the coming year.
- Carrier Global (CARR) shares slipped 8.8% after the air conditioning manufacturer and building automation supplier missed quarterly sales estimates as the company moved to exit its Fire & Security business. Carrier's departure from the Fire & Security business also prompted the firm to trim its full-year sales and profit forecasts.
Tesla Had Its Best Day in More Than a Decade
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Tesla (TSLA) stock notched its best day in more than a decade on Thursday after the electric vehicle maker topped earnings estimates and promised a lower-cost model would begin production early next year.
Tesla shares soared 22% Thursday, their biggest one-day gain since May 2013 when the company reported $500 million in quarterly sales for the first time. In the most recent quarter, vehicle sales exceeded $20 billion.
Tesla's surging stock lifted the S&P 500's Automobiles Industry Index, which advanced more than 18% Thursday. Shares of other automakers were mixed, with General Motors (GM) slipping and Ford (F) advancing.
Uber (UBER) shares slid nearly 2%; its stock surged to a record high earlier this month when Tesla's robotaxi rollout failed to convince investors it posed a threat to the ride-sharing giant.
CEO Elon Musk assured analysts on the company’s earnings call that “plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025.”
Read the full article here.
ServiceNow Hits Record High on Optimism About AI Demand
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Shares of ServiceNow (NOW) traded at an all-time high Thursday, a day after the software and IT services provider posted better-than-expected results and boosted its guidance as demand for its artificial intelligence (AI) platform boomed.
The company reported third-quarter adjusted earnings per share (EPS) of $3.72, with revenue rising 22% year-over-year to $2.80 billion. Both exceeded forecasts. Subscription revenue gained 23% to $2.72 billion, and professional services and other revenue was up 14% to $82 million.
CEO Bill McDermott said both existing and new customers are "doubling down on their investments in ServiceNow as the AI platform for business transformation."
ServiceNow shares were up 5% at around $954 in recent trading, after hitting a record of $979.78 earlier in Thursday's session. The stock has gained 35% since the start of the year, outpacing the 22% increase for the S&P 500.
Southwest Down Despite Deal With Activist, Strong Earnings
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Southwest Airlines (LUV) announced a settlement with Elliott Investment Management Thursday morning, ending a monthslong battle with the activist investor that has been calling for significant leadership and business strategy changes at the carrier.
Southwest agreed to reduce its board to 13 seats by its 2025 shareholder meeting, with Elliott-sponsored candidates set to take five of those spots, with a sixth replacement seat going to former Chevron (CVX) CFO Pierre Breber. The new board members will replace six retiring members— including Executive Chairman Gary Kelly, who previously served as Southwest's CEO—on November 1, the company said.1
As part of the settlement, Elliott has agreed to drop its call for a December special shareholder meeting as Elliott Partner John Pike and Portfolio Manager Bobby Xu said they believe the airline is now well positioned to "enhance business performance, drive operational execution and evaluate additional changes to create long-term shareholder value."
News of the settlement came shortly after Southwest reported third-quarter results that exceeded Wall Street expectations.
The airline reported $6.87 billion in total revenue, up nearly 6% from the same time last year and a bit better than analyst estimates compiled by Visible Alpha. Net income fell sharply year-over-year to $67 million from $193 million last year, but didn't fall as far as analysts had projected, to $19.8 million.
The airline also said it plans to buy back $250 million in stock in the fourth quarter, the first "accelerated share repurchase program" since it announced a new $2.5 billion stock buyback plan last month.
Southwest shares had initially surged in premarket trading after the release of the quarterly results, but started falling with the news of the Elliott agreement.
The stock was down 6% in mid-afternoon trading, putting it back at the same level it started 2024.
Tesla Jumps on Optimism About Outlook for 2025
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Tesla (TSLA) shares are roaring higher a day after the company’s third quarter results, which analysts at Wedbush called an “Aaron Judge-like performance.”
The firm noted Tesla’s prediction of 20% to 30% vehicle delivery growth next year, “compared to Street numbers in the 10%-12% heading into the print.” Wedbush maintained its Outperform rating and $300 price target, using the moment to liken Tesla to Judge—the slugger who put up mega-numbers for baseball's New York Yankees this season.
Not every analyst is buying it, though. JPMorgan called the results a return to "ebullient forecasts" from Musk, "which may or may not qualify as guidance."
The firm's own outlook is 12% growth. JPMorgan maintained its Underweight rating but upped its price target to $135 from $130.
The electric vehicle maker posted third-quarter net income of $2.17 billion or 62 cents per share, up from $1.85 billion or 53 cents per share a year ago. That result topped analysts' estimates as margins rose to 19.8% from 17.9%.
Shares of Tesla jumped 21% to around $258 as of Thursday afternoon, pushing the stock back into positive territory for 2024.
Honeywell Shares Drop as Company Lowers Outlook
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Honeywell International (HON) shares declined Thursday morning after the aviation and safety equipment manufacturer missed sales estimates and lowered its revenue guidance as demand for its industrial automation products slumped.
Honeywell reported third-quarter revenue rose almost 6% year-over-year to $9.73 billion, while analysts surveyed by Visible Alpha were looking for $9.89 billion. Adjusted earnings per share (EPS) of $2.58 exceeded forecasts.
Sales at its Industrial Automation segment declined 5% to $2.50 billion, which the company blamed on "volume softness in warehouse and workflow solutions and safety and sensing technologies."
CEO Vimal Kapur said that the company "executed through a challenging environment in the third quarter." Kapur added that it made significant progress this year "on the simplification and optimization of the Honeywell portfolio," which included the planned spinning off of its Advanced Materials division and the exiting of its personal protective equipment (PPE) business, as well closing on four acquisitions.
The company said that because of the closings of those purchases, along with third quarter-results and management's outlook for the rest of the year, it was lowering its 2024 sales forecast to a range of $38.6 billion to $3.88 billion from the earlier prediction $39.1 billion to $39.7 billion. It narrowed the range of adjusted EPS to $10.15 to $10.25 from $10.05 to $10.25.
Honeywell shares were down 4.5% in recent trading and were the second-biggest decliner in the Dow.
IBM Stock Sinks on Disappointing Revenue
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IBM (IBM) shares were down nearly 6% early Thursday and were the biggest Dow decliner after the company reported quarterly revenue that fell short of Wall Street estimates.
The company late Thursday reported third-quarter revenue of $14.97 billion, up 1% year-over-year and 2% in constant-currency terms but lower than the $15.07 billion consensus estimate of analysts polled by Visible Alpha. Infrastructure revenue fell 7% and consulting revenue remained flat.
IBM posted a net loss of $330 million, or $0.36 per share, due to a $2.7 billion pension-settlement charge. Analysts expected a profit of $1.72 billion, or $1.84 per share.
IBM Chief Executive Officer (CEO) Arvind Krishna said the group expects fourth-quarter revenue growth, in constant-currency terms, to be “consistent” with the third quarter, driven by strong software sales. Krishna said the firm's "AI book of business now stands at more than $3 billion, up more than $1 billion quarter to quarter."
Even after falling early Thursday, IBM shares are up nearly 35% this year.
UPS Shares Surge as Shipping Giant Returns to Growth
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United Parcel Service (UPS) shares jumped in premarket trading as the company reported third-quarter results that came in above analysts' expectations.
The shipping giant reported revenue of $22.2 billion, better than the $21.94 billion consensus estimate of analysts compiled by Visible Alpha. Net income came in at $1.54 billion, or $1.80 per share, above projections, which called for $1.36 billion and $1.59 per share.
Thursday's results mark the first time in nearly two years that UPS returned to posting year-over-year revenue and profit gains, after it and shipping rival FedEx (FDX) each reported declines following peaks in shipping demand during the pandemic.
UPS shares were up 9% at $143, trading at their highest level in three months.
-Aaron McDade
Futures Tied to Major Indexes Mixed
12 hr 58 min ago
Futures tied to the Dow Jones Industrial Average were down 0.2%.
S&P 500 futures were up 0.5%.
Nasdaq 100 futures were up 0.9%.