Tesla Ignites a Surge in U.S. Tech Stocks After Strong Earnings

U.S. tech stocks saw a notable rise in after-hours trading following the market close,
led by Tesla, which jumped 9% after the company announced quarterly earnings that exceeded analysts’ expectations.

Tesla kicked off the earnings season for the “Magnificent Seven” with strong results,
reporting adjusted earnings of 72 cents per share, surpassing the average analyst estimates.
The company also indicated its expectation for slight growth in vehicle deliveries by the end of the year.

Topic
Wall Street
Bonds

Wall Street

Wall Street Rebound

After significant sell-offs in the markets, Wall Street pointed to a recovery led by tech stocks. The $300 billion exchange-traded fund, QQQ, which tracks the Nasdaq 100 Index, rose in after-hours trading, reflecting a wave of optimism in the market. This recovery comes amid bets that the Federal Reserve will adopt a more cautious approach regarding interest rate cuts.

Concerns About Slowdowns in Other Sectors

Despite Tesla’s positive performance, some other companies saw declines. IBM shares fell after the company reported disappointing third-quarter revenues, impacted by a slowdown in demand for consulting services. Meanwhile, T-Mobile US reported an increase in mobile and broadband subscribers, in line with analysts’ expectations, prompting the company to raise its forecast for profits and new customers this year.

Other Market Indicators

At the same time, the S&P 500 Index fell below 5800 points, while the Nasdaq 100 Index dropped by 1.6%, and the Dow Jones Industrial Average fell by 1%. U.S. Treasury 10-year bond yields rose by three basis points to reach 4.23%. Internationally, the U.S. dollar appreciated against all major currencies in the G10 group, while the Japanese yen fell to its lowest level in three months, raising concerns about potential intervention by the Bank of Japan. Additionally, the Canadian dollar weakened after the Bank of Canada accelerated its pace of monetary easing.

Investor Challenges

In the coming weeks, investors face several challenges that could impact their risk appetite, including the earnings season for major tech companies, the October jobs report, the U.S. elections, and the Federal Reserve meeting. Investors are also closely monitoring the movements of 10-year Treasury yields, which have reached their highest levels since November.

Bonds

Bond Repricing

Jonathan Krinsky from BTIG noted that stocks have recently been more influenced by the movements of bonds and the U.S. dollar, which contrasts with market behavior in recent weeks. Despite the current improvement, Krinsky expects the markets to face downward pressure in the coming weeks, predicting that the S&P 500 may fall to a range of 5500-5650 points.

Hedging Against Bond Declines

Options contracts protecting against further declines in U.S. Treasury bond prices have reached their highest levels this year, reflecting investor concern over worsening losses. At the same time, interest rate swaps are increasingly pricing in expectations that the Federal Reserve will not implement significant rate cuts during its two remaining meetings this year.

Mixed Market Outlooks

Opinions about the future of the stock market are divided. Andrew Brenner from NatAlliance Securities stated that the rise in hedging options against falling bonds reflects investor concerns about political and economic challenges. Some analysts have warned that upcoming economic data may carry surprises that could negatively impact the markets.

Meanwhile, Tiffany Wilding from Pacific Investment Management advised investors not to overestimate the recent rise in bond yields, noting that stock performance in the month following the first interest rate cut does not necessarily indicate future economic trends.

Conversely, Nicholas Colas from DataTrek Research remains optimistic about major U.S. stocks,
pointing out that economic growth is still strong, and he expects corporate earnings to continue growing in the coming quarters.

Tesla Ignites a Surge in U.S. Tech Stocks After Strong Earnings

Tesla Ignites a Surge in U.S. Tech Stocks After Strong Earnings

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