The earnings season has sent the market into a scramble. Strong reports from major banks last week sent the market soaring, followed by Tuesday’s estimate miss from Netflix and electric-vehicle numbers from Tesla after the market close, which had all four US indices slipping on Wednesday.
- The S&P 500 slipped 0.5%, held mainly by the immense gain in Intuitive Surgical’s stock.
- The tech-heavy Nasdaq Composite was down 0.9%, ahead of the earnings release from EV giant Tesla, which also marks the start of reports from the Magnificent Seven.
- The Dow Jones Industrial Average slipped 0.8%, with several prominent names, including Apple, Goldman Sachs, Amazon, and Salesforce, falling.
- The small-cap Russell 2000 suffered significantly, closing down 1.5%.
It’s not just the earnings or the preview that had the market stirring on Wednesday. Following a Reuters report stating that the White House is considering a plan to restrict exports of a wide range of products to China, the indices fell even lower, increasing uncertainty.
Gold prices continued to edge lower, declining intraday before gaining 0.4% near the close. The U.S. 10-year Treasury yield remained below the 4% mark, but oil prices gained around 4% on Wednesday.
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Tesla’s stock was down 0.8% at the close, ahead of anticipated Q3 earnings, and continued to slide after the closing bell, down 3.8% at last check. Intuitive Surgical’s stock was up 13.8%, credited to its second consecutive positive earnings report.
Tomorrow, we can look forward to reports from Intel, Honeywell, T-Mobile, and Blackstone, among others.
Here are the most active stocks today
Five S&P 500 stocks making big moves today are:
- Intuitive Surgical: +13.9%
- Avery Dennison: +9.5%
- Halliburton Co: +4.2%
- SLB: +4.1%
- Boston Scientific Corp: +3.9%
The worst-performing five S&P 500 stocks today are:
- Lennox International: -10.2%
- Netflix Inc: -10.1%
- Quanta Services Inc: -5.8%
- On Semiconductor Corp: -5.7%
- Texas Instruments: -5.6%
Stocks also worth noting include:
- Nvidia : -0.5%
- Micron : -1.9%
- AMD: -3.3%
- Plug Power: -6.4%
- Palantir: -3.3%.
Are earnings a success or a miss for Tesla?
Tesla shares, which were in focus on Wednesday before the earnings release, dropped 0.8% intraday and were down nearly 4% after closing.
However, the EV maker reported a profitable quarter, with $28.1 billion in total revenue, marking a 12% year-over-year increase. While it reported a fresh cash flow of nearly $4 billion, its operating margins slipped to 5.8% due to a 40% year-over-year decrease in operating income to $1.6 billion.
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It cited higher operating expenses, investments in AI initiatives, R&D, and a one-time reduction in fully self-driving revenue recognition as primary reasons for the decrease in operating income.
While the company highlighted growth in its energy and AI-driven businesses, it also flagged “near-term uncertainty from shifting trade, tariff and fiscal policy,” and a focus on “long-term growth and value creation,” in the shareholder’s note.
Last week, Melium Research analyst Rob Wertheimer initiated coverage of Tesla with a Buy rating and a $520 price target because of confidence in Tesla’s ability to deliver on its potential success in autonomous vehicles.
Related: Tesla earnings can’t hide this big EV industry issue
However, BNP Paribas Exane analyst James Picariello was bearish on the EV stock and had an Underperform rating with a $307 target price for Tesla, arguing that autonomous ventures remain speculative.
Barclays raised its price target to $350 from $275, maintaining an Equal Weight rating, suggesting that Tesla will enter Q3 earnings with two “contrasting” stories, marked by an ambitious AI narrative and a weakening fundamental backdrop, as reported at TheFly.
High-end surgical instruments resilient
Intuitive Surgical, manufacturer of the da Vinci and Ion endoluminal system, emerged as a top performer on Wednesday, trading 13.9% higher.
Specializing in robot-assisted surgery, the company’s stock has gained 20% over the past week, driven by robust earnings.
Related: Stock Market Today: Tesla and IBM Tumble After Earnings; Moderna Trial Misses
Intuitive Surgical topped Wall Street expectations in a second straight quarter of more than 20% revenue and earnings per share growth, signaling rising healthcare capital spending and investment in high-cost productivity-enhancing technologies.
Analysts are mostly optimistic about its future growth, with RBC Capital raising its price target to $625 from % $615, maintaining an Outperform rating.
And Mizuho analyst Anthony Petrone raised the price target to $575 from $520, while maintaining a Neutral rating, citing that while the company can maintain its “bellwether” growth, its growth is already priced into the shares, as reported by TheFly.
Meanwhile, Baird’s increase to $655 from $536, with an Outperform rating, on the beat and raise in Q3 bucks the bear thesis overhang.
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