Wednesday morning saw US stock futures broadly steady, with investors on edge as they await another round of major quarterly earnings. The spotlight is on electric vehicle maker Tesla (NASDAQ
), which will release its results after market close, while Texas Instruments (NASDAQ
) has already given the markets a boost with a stronger-than-expected third-quarter profit report. In contrast, Starbucks (NASDAQ
) stumbled after suspending its annual financial forecast, sending its shares lower in after-hours trading.
Tech Holds Steady Amid Market Uncertainty
On Tuesday, the tech-heavy Nasdaq Composite managed a slight gain of 0.2%, driven by a rebound in Big Tech stocks. The recovery comes after a summer of volatility and was fueled by the Federal Reserve’s significant 50 basis points interest rate cut in September. However, the mood was not shared across the board as both the S&P 500 and Dow Jones Industrial Average closed slightly lower. The pullback was primarily driven by concerns over rising bond yields, with the benchmark US 10-year Treasury yield reaching its highest level since late July.
Despite the cautious sentiment, analysts at Vital Knowledge have suggested that this is more of a “function of the pullback in equities” rather than any major shift in market fundamentals. However, traders are now closely watching the Fed’s next move, as recent economic data and growing concerns over national debt may affect the central bank’s willingness to make further rate cuts in the near term.
Tesla’s Earnings on Deck
All eyes are on Tesla’s upcoming earnings report, set to be released after the market closes on Wednesday. Tesla’s shares have been under pressure, falling 12% this year, significantly underperforming the broader S&P 500, which has gained 23.4%. Investor confidence in the company took a hit following the recent release of its robotaxi, which many critics deemed light on specifics. With Tesla’s valuation already stretched, another disappointing report could reignite concerns about the overall health of tech stocks.
Market participants are optimistic about the economy after a strong jobs report and the recent Fed rate cut, but Tesla’s report could sway sentiment and bring tech valuations back under scrutiny.
Texas Instruments Surprises with Strong Earnings
In brighter news, Texas Instruments posted solid third-quarter results, exceeding Wall Street expectations. The company reported earnings per share of $1.47 on revenue of $4.15 billion, beating forecasts of $1.38 EPS on $4.12 billion in revenue. The chipmaker credited growth in the Chinese electric vehicle market for its better-than-expected results, as sales of automotive products surged in the third quarter.
This report is significant as investors try to gauge the overall health of the semiconductor industry amid fluctuating demand. Texas Instruments’ CEO, Haviv Ilan, highlighted the company’s strong position in the EV market in China, noting that “momentum” in that space was a key driver for growth.
Starbucks Withdraws Financial Guidance
Starbucks had a rough session in after-hours trading, dropping after the coffee giant announced it would suspend its financial outlook through the upcoming fiscal year. In a preliminary filing, Starbucks cited weak demand for higher-priced items in the US as a major factor in a downturn in same-store sales, net revenue, and income for Q4.
The company’s new CEO, Brian Niccol, who took the reins in August, noted that Starbucks needs a “fundamental change” in strategy to return to growth, suggesting that the company’s menu has become “overly complex.” However, in an attempt to reassure investors, Starbucks did increase its quarterly dividend from $0.57 to $0.61 per share.
Oil Prices Slip Amid Rising US Crude Inventories
Oil prices faced pressure on Wednesday, falling slightly as US crude inventories showed a surprise increase. The American Petroleum Institute reported a 1.643 million barrel rise in oil stocks, sparking concerns about a slowdown in US fuel demand. Brent crude dropped 0.6% to $75.62 per barrel, while WTI traded 0.6% lower at $71.29 per barrel.
However, Middle East tensions continue to lend support to prices. Recent geopolitical developments, including Israel’s elimination of a key Hezbollah figure, have kept traders cautious. The market is eyeing the possibility of further escalations, which could disrupt supply from this crucial oil-producing region.
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