Upbeat Earnings News May Lead To Extended Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to extend the notable upward move seen over the two previous sessions.

A positive reaction to the latest corporate earnings news may contribute to an extended rebound on Wall Street following the considerable weakness seen last week.

Shares of Tesla (TSLA) are skyrocketing by 11.4 percent in pre-market trading even though the electric vehicle maker reported weaker than expected first quarter results.

The surge by Tesla comes after CEO Elon Musk said the company plans to start production of a new affordable model by early 2025.

Semiconductor company Texas Instruments (TXN) is also seeing significant pre-market strength after reporting first quarter results that beat expectations on both the top and bottom lines.

Shares of Visa (V), Boeing (BA) and Mattel (MAT) are also likely to move to the upside after the companies reported better than expected quarterly results.

U.S. stocks ended on a firm note on Tuesday, extending gains from the previous session, with technology shares once again outperforming amid optimism about earnings.

A batch of encouraging earnings updates and slightly easing concerns about the outlook for interest rates helped underpin sentiment.

The major averages all ended notably higher. The Dow settled with a gain of 263.71 points or 0.7 percent at 38,503.69. The S&P 500 jumped 59.95 points or 1.2 percent to 5,070.55, while the Nasdaq surged 245.33 points or 1.6 percent to settle at 15,696.64.

Several technology heavyweights such as Microsoft, Alphabet, Meta Platforms and Intel are scheduled to announce their quarterly earnings this week.

Other big names, including Boeing, American Airlines, Chevron and Exxon Mobil, are also slated to report their quarterly earnings during the course of this week.

Verizon rallied about 3.5 percent. American Express climbed 2.5 percent, while Caterpillar, Goldman Sachs, Walt Disney, Microsoft, JPMorgan Chase and IBM ended higher by 1.3 to 2 percent.

Netflix, Palo Alto Networks, Nvidia, Illumina, Moderna and Microchip Technology ended sharply higher.

Tesla Inc. reported a few minutes after the closing bell that its total earnings totaled $1.13 billion, or $0.34 per share in the first quarter. This compares with $2.51 billion, or $0.73 per share, in last year’s first quarter. Excluding items, Tesla Inc. reported adjusted earnings of $1.54 billion or $0.45 per share for the period.

Globe Life soared 13.5 percent, topping the list of gainers in the S&P 500 index. Danaher and GE Aerospace surged on strong results. Kimberly-Clark and General Motors also ended sharply higher.

Walmart drifted down 2.3 percent. Boeing ended down nearly 1 percent. Invesco and Pepsico also ended sharply lower, with the latter dropping on somewhat disappointing quarterly results.

In economic news, the S&P Global US Composite PMI declined to 50.9 in April from 52.1 in the previous month, signaling only a slight expansion in the country’s private sector, which was the softest since December, a preliminary estimate showed.

The S&P Global Flash US Manufacturing PMI fell to a four-month low of 49.9 in April 2024, from 52.0 in March. The reading was expected to come in at 52.0. The S&P Global US Services PMI dropped to a five-month low of 50.9 in April.

A report released by the Commerce Department showed new home sales spiked by 8.8 percent to an annual rate of 693,000 in March after plunging by 5.1 percent to a revised rate of 637,000 in February.

Economists had expected new home sales to rise to an annual rate of 668,000 from the 662,000 originally reported for the previous month.

Traders await more economic data this week, including the release of first-quarter U.S. GDP data as well as the core personal-consumption expenditures (PCE) price index, which is the Fed’s preferred measure of inflation.

Commodity, Currency Markets

Crude oil futures are slipping $36 to $83 a barrel after surging $1.46 to $83.36 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,329.80, down $12.30 compared to the previous session’s close of $2,342.10. On Tuesday, gold edged down $4.30.

On the currency front, the U.S. dollar is trading at 154.93 yen compared to the 154.11 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0683 compared to yesterday’s $1.0701.

Asia

Asian stocks advanced on Wednesday as focus remained on earnings reports from the U.S. megacaps due this week.

Facebook owner Meta Platforms will declare its first-quarter earnings later today, while Microsoft and Alphabet will report their financial results on Thursday.

Electric vehicle giant Tesla announced plans to introduce new vehicle models earlier than previously anticipated, boosting optimism about growth.

The dollar and U.S. Treasury yields dipped after U.S. manufacturing and services PMI numbers came in weak.

Gold struggled for direction in Asian trading but stayed above $2,300 per ounce. Oil prices were largely unchanged after seeing sharp gains in the previous session on bullish inventory data.

Chinese shares rose notably, with the Shanghai Composite Index climbing 0.8 percent to 3,044.82 after Ping An Insurance reported better-than-expected growth in its new-business values.

Hong Kong’s Hang Seng Index jumped 2.2 percent to 17,201.27. Shares in Chinese artificial intelligence (AI) software developer SenseTime Group soared 31.2 percent after the company announced its latest generative AI model.

Japanese markets ended sharply higher as strong earnings from Texas Instruments lifted chip-related stocks.

The Nikkei 225 Index surged 2.4 percent to 38,460.08, extending gains for a third day running ahead of a BOJ policy meeting later in the week. The broader Topix Index settled 1.7 percent higher at 2,710.73.

Advantest rallied 3.6 percent, Screen Holdings added 4.6 percent, Tokyo Electron soared 7.1 percent and Renesas Electronics jumped 10.5 percent.

Nikon surged 10.3 percent to post its biggest daily gain in 11 years after investment management company Silchester International Investors disclosed it has taken a stake in the camera maker.

The yen was pinned near 34-year lows against the dollar after Japanese Finance Minister Shunichi Suzuki said that the environment for an appropriate response over the foreign exchange market has become ready.

Seoul stocks advanced, with the Kospi closing up 2.0 percent at 2,675.75 – logging its biggest rise since March 21.

Tech heavyweights Samsung Electronics and SK Hynix climbed 4.1 percent and 5.2 percent, respectively. Battery maker LG Energy Solution added 4.1 percent.

Australian markets gave up initial gains to end marginally lower after data showed consumer inflation in the country remained strong in the first quarter, reinforcing the case for the Reserve Bank to keep interest rates higher for longer.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index closed up 1.2 percent at 11,946.43.

Europe

European stocks are higher on Wednesday, though the upside remains capped after an ECB policymaker said that a possible June rate cut might not be followed by more.

Joachim Nagel, president of Germany’s Bundesbank, said in a speech at the DZ Bank Capital Markets Conference 2024 that a June interest rate cut from the European Central Bank might not necessarily be followed by a series of rate cuts.

Meanwhile, investor sentiment was underpinned after survey data from the ifo Institute showed business sentiment in the country improved in April.

The business confidence index climbed to 89.4 in April while economists had forecast the score to rise moderately to 88.9 from March’s initially estimated value of 87.8.

While the U.K.’s FTSE 100 Index is up by 0.6 percent, the French CAC 40 Index is up by 0.5 percent and the German DAX Index is up by 0.2 percent.

Water processing equipment supplier ASM International has spiked cent. The company raised its second quarter revenue forecast after beating analyst estimates for revenue and earnings in the first quarter.

Casino Guichard-Perrachon has also surged. The company said it is embarking on a transformation plan aimed at aligning its organization with the Group’s new scope.

Engineering group Filtronic has also soared after announcing a strategic partnership and commercial agreement with Space Exploration Technologies Corp.

Reckitt Benckiser has also moved sharply higher as it reported first quarter like-for-like net revenue growth of 1.5 percent.

Meanwhile, Swedish automaker Volvo Cars has tumbled as its first quarter revenue came in below expectations.

Lender Handelsbanken has also shown a substantial move to the downside after its first quarter earnings missed analyst estimates.

Drugmaker Roche has also moved notably lower after reporting a 6 percent decrease in first quarter sales.

German biotech Evotec SE has also plummeted after reporting its full-year results and naming a new chief executive.

French luxury group Kering has also plunged after a profit warning and amid concerns about declining demand for its Gucci brand.

Sound Energy has also fallen in London after the upstream gas company slipped to a loss in 2023 and expressed concern about continuing as a going concern.

U.S. Economic Reports

With orders for transportation equipment showing a substantial increase, the Commerce Department released a report on Wednesday showing new orders for U.S. manufactured durable goods surged by more than expected in the month of March.

The report said durable goods orders soared by 2.6 percent in March after climbing by a downwardly revised 0.7 percent in February.

Economists had expected durable goods orders to spike by 2.3 percent compared to the 1.3 percent jump that had been reported for the previous month.

Excluding the surge in orders for transportation equipment, durable goods orders crept up by 0.2 percent in March after inching up by 0.1 percent in February. Ex-transportation orders were expected to rise by 0.3 percent.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended April 19th.

Crude oil inventories are expected to increase by 1.6 million barrels after jumping by 2.7 million barrels in the previous week.

The Treasury Department is scheduled to announce the results of this month’s auction of $70 billion worth of five-year notes at 1 pm ET.