Tesla stock surge/ Wall Street steadies/ U.S. stock market/ UPS earnings/ IBM stock drop/ Treasury yields impact/ jobless claims report/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ Wall Street steadied on Thursday, supported by a 16% surge in Tesla stock after better-than-expected quarterly profits. The S&P 500 rose 0.2%, breaking a three-day losing streak, while the Nasdaq gained 0.6%. UPS also posted strong earnings, pushing its stock up 9.7%, while Boeing and IBM lagged behind.
Wall Street Gains Quick Looks:
- Tesla leads: Tesla stock jumped 16.1% after surpassing profit forecasts, despite lower-than-expected revenue.
- UPS boost: UPS shares rose 9.7% following a strong profit report, offering insights into broader economic strength.
- Mixed performance: IBM and Boeing fell, weighing on the Dow, which dropped 110 points.
- Economic outlook: A report on unemployment claims showed fewer layoffs but a rise in continuing claims, signaling a slowing but stable economy.
- Treasury yields: Treasury yields eased slightly after the unemployment data, with the 10-year yield at 4.22%.
Wall Street Steadies as Tesla Jumps 16% on Profit Beat
Deep Look:
Wall Street Steadies as Tesla and UPS Rally, Offsetting IBM and Boeing Losses
Wall Street found some stability on Thursday, bolstered by a surge in Tesla’s stock following a strong quarterly profit report. The S&P 500 rose 0.2% in early trading, putting it on track to snap its three-day losing streak. The tech-heavy Nasdaq composite saw a 0.6% increase, while the Dow Jones Industrial Average lagged behind, dipping by 110 points or 0.3%.
Tesla’s Profit Pushes Stock Higher
Tesla was the driving force behind Thursday’s market gains, with its stock soaring 16.1%. The electric vehicle maker posted quarterly profits that exceeded analysts’ expectations, though its revenue for the period came in below forecasts. CEO Elon Musk’s optimistic outlook for 2025, predicting 20% to 30% sales growth, helped fuel investor confidence despite the revenue shortfall. Tesla’s strong performance provided a much-needed lift for the broader market, particularly for the Nasdaq, which has seen volatility in recent weeks.
UPS and Lam Research Add to Gains
UPS was another standout performer, with its stock climbing 9.7% after reporting stronger-than-expected profits. The company’s revenue also narrowly beat analysts’ expectations. As a bellwether for economic activity due to the wide range of industries it serves, UPS’s earnings report suggested resilience in the economy despite concerns over higher interest rates and inflation. Lam Research, a key supplier for the semiconductor industry, also added to market optimism with a 5.8% jump in its stock price following better-than-expected earnings.
Dow Drags on Weak IBM and Boeing Performance
While Tesla and UPS drove gains for the S&P 500 and Nasdaq, the Dow Jones Industrial Average was weighed down by disappointing performances from IBM and Boeing. IBM shares dropped 6.2% after the company reported quarterly revenue that fell slightly short of analysts’ projections. Boeing also struggled, falling 2.4% after its machinists voted to continue their strike, disrupting aircraft production. The strike, now in its sixth week, continues to cripple Boeing’s output, casting a shadow over the company’s outlook.
Rising Treasury Yields Temper Stock Gains
The broader stock market has faced pressure this week due to rising Treasury yields, which make bonds more attractive relative to stocks. The 10-year Treasury yield, a key benchmark, hovered around 4.22% on Thursday, down slightly from 4.25% the previous day but still significantly higher than last week’s 4.08%. Investors have been adjusting their expectations as the U.S. economy continues to outperform, prompting a reassessment of how deeply the Federal Reserve will cut interest rates.
Higher Treasury yields often put downward pressure on stock prices, as they raise the cost of borrowing for companies and reduce the present value of future profits. Stocks, particularly those in the tech sector, which rely heavily on future growth, have been hit hardest by the rising yields in recent weeks.
Mixed Economic Signals from Unemployment Data
Economic data released Thursday offered a mixed view of the U.S. labor market. The number of new unemployment claims fell by 15,000 to 227,000 for the week of October 19, signaling that layoffs remain low. However, the total number of continuing claims, which tracks the number of people receiving unemployment benefits, rose by 28,000 to 1.9 million for the week of October 12, the highest level since 2021. This suggests that while layoffs are not increasing dramatically, more workers are struggling to find new jobs after becoming unemployed.
Economists from High Frequency Economics noted that while the data reflects a slowing labor market, it is not yet indicative of a severe downturn. “There is no sign of a crash in employment or a surge of layoffs,” they said, but the rising continuing claims could be a signal that demand for labor is softening as the economy cools.
Global Market Reaction
Stock markets overseas posted modest gains, with European indexes trading higher and Asian markets ending mixed. Investors worldwide continue to watch U.S. economic data and Federal Reserve policy closely, as any shift in the U.S. economy could have global ripple effects.
Outlook: Resilience Amid Volatility
Despite the market’s recent pullback, particularly in tech stocks, Thursday’s rally led by Tesla and UPS suggests resilience in parts of the economy. The rise in continuing unemployment claims and elevated Treasury yields, however, highlight the challenges ahead as investors navigate the delicate balance between growth and inflation. The Federal Reserve’s approach to interest rates and the performance of key economic sectors will be critical factors in determining the market’s trajectory in the coming weeks.
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