Nasdaq, S&P 500 poised for a comeback as Tesla earnings lift spirits

The Big Food M&A vibes continue into year end.

Keurig Dr. Pepper (KDP) is spending about $1 billion to buy energy drink maker Ghost. It makes sense given the growth in the category. What doesn’t make sense is why Coca-Cola (KO) and PepsiCo (PEP) haven’t purchased the rest of the stakes they own in Monster (MNST) (Coke) and Celsius (CELH) (PepsiCo).

Here is some thinking into new CEO Tim Cofer’s strategy at KDP; he last hopped on Yahoo Finance in late March. I suspect he is just getting started on the deal front.

Tesla’s (TSLA) recent emphasis on its lofty, somewhat vague AI ambitions, highlighted in its recent robotaxi event Oct. 10, may have sent the stock down — but Morgan Stanley said the company’s latest earnings showed it’s still focused on revving up its auto business, which accounts for 80% of Tesla revenue.

“As investors struggle with the business model shift from auto to AI, this print reminds us growing the auto business profitably remains a high priority,” wrote Morgan Stanley’s Adam Jonas in a note to investors. He pointed to CEO Elon Musk’s comments about targeting 20% to 30% growth in EV deliveries in 2025, while focusing on lowering costs and bringing its internally-produced 4680 batteries to scale.

Shares of Tesla jumped 17% after the opening bell a day after the results were released, adding tens of billions to its market cap.

Morgan Stanley analysts see shares rising to $310 over the next 12 months and reiterated their Buy rating on the stock.

The Nasdaq (^IXIC) jumped on Thursday to lead a rebound in US stocks as Tesla’s (TSLA) surprisingly solid results and high-flying sales forecast lifted hopes for a strong earnings season.

The Dow Jones Industrial Average (^DJI) fell more than 100 points, or nearly 0.3%. The tech-heavy Nasdaq Composite (^IXIC) gained about 0.6%, leading the way down, while the benchmark S&P 500 (^GSPC) added more than 0.2%.

Tesla kicked off “Magnificent Seven” earnings with its biggest quarterly profit in over a year, driving a wave of optimism that set stocks up for a comeback from Wednesday’s sharp losses. Shares rose more than 15% at the open.

Boeing shares (BA) were down nearly 3% in premarket trading after machinist union workers voted late Wednesday against the plane maker’s latest contract offer. The outcome means the current strike will continue.

The proposed agreement included a 35% general wage increase across four years, though without the defined-benefit pension plan the union wanted.

The strike, which started on Sept. 13, is an ongoing challenge for struggling Boeing, which on Wednesday posted a quarterly loss of more than $6 billion.

Earlier this month, Boeing said it would cut its workforce by 10%, or roughly 17,000 jobs, and delay the first delivery of its 777X jet to 2026.

A weekly reading on initial jobless claims released on Thursday morning came in at 227,000, versus estimates of 242,000, per a Bloomberg survey.

The print released by the Department of Labor showed an unexpectedly sharp decline in claims compared with the prior week’s upwardly revised 242,000 amid recent volatility in filings due to Hurricane Helen and Milton.

Continuing jobless claims rose by 28,000 to 1.897 million.

Tesla (TSLA) stock jumped over 13% premarket Thursday morning, adding tens of billions of dollars in market cap to the Elon Musk-helmed EV company.

Yahoo Finance’s Pras Subramanian reports that Tesla beat analysts’ expectations on adjusted earnings per share and higher gross margins. Musk said he expects the company’s vehicle deliveries will grow 20% to 30% next year. Still, its revenue missed expectations. Here are the details of its third quarter results compared to Wall Street’s forecasts, according to Bloomberg consensus estimates:

Read the full story here.

Tesla stock has had a rocky few months riddled with ups and downs. The stock surged in anticipation of the company’s third-quarter EV deliveries report and robotaxi event, but plunged when those milemarks disappointed. The company missed Wall Street estimates for third-quarter deliveries in early October.

Wall Street analysts harshly criticized the company’s robotaxi event, saying the company’s self-driving taxi plans were too vague and “light of real numbers and timelines.”

Economic data: Initial Jobless & Continuing Claims, (week ending Oct. 19, week ending Oct. 12); S&P Global US Manufacturing & Services PMI (October preliminary); New Home Sales (September); Kansas City Fed Manufacturing Activity (October); Chicago Fed National Activity Index (September).

Earnings: 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)

Here are some of the biggest stories you may have missed overnight and early this morning:

Tesla jumps after earnings surprise, upbeat outlook

Boeing stock falls after workers reject latest labor offer

American Airlines lifts 2024 profit forecast

Southwest reaches agreement with activist, ending long battle

How Musk’s ‘distractions’ could turn into big wins

IBM stock falls amid slowing spending on non-GenAI projects

Consumers are better off than in 2019, but they don’t feel that way

T-Mobile beats estimates for wireless subscriber growth