* Tesla Kicks Off "Big Seven" Earnings with Announcement of Early Launch of New Models
* US April Markit Manufacturing PMI Preliminary Value Hits 4-Month Low
* General Motors' First Quarter Results Beat Expectations, Shares Close Up 4.4%
On Tuesday, April 23rd, local time, ahead of the quarterly earnings announcements from large tech stocks, the three major US stock indices continued their recovery trend. In addition to the boost from strong earnings expectations from tech companies, the earlier released US April Purchasing Managers' Index (PMI) data unexpectedly cooled down, alleviating investors' concerns about the resilience of inflation delaying the Federal Reserve's interest rate cut expectations. By the close, the Dow Jones Industrial Average rose by 0.69%, the Nasdaq Composite rose by 1.59%; the S&P 500 Index rose by 1.20%, marking the largest single-day gain since February.
In terms of industry sectors, out of the eleven sectors of the S&P 500 Index, ten rose and one fell. The communication services sector and the technology sector led the gains with increases of 1.86% and 1.71%, respectively, while the materials sector fell by 0.84%.
Chinese concept stocks rose strongly, with the NASDAQ Golden Dragon China Index closing up nearly 2%. Among popular stocks, Futu Holdings rose by 11%, iQIYI rose by 6%, and both JD.com and Alibaba rose by more than 2%.
As the first large tech stock to announce earnings this week, Tesla's earnings report after the market closed showed a 9% decline in first-quarter revenue, the largest drop since 2012. Net profit fell from $2.513 billion in the same period last year to $1.13 billion, a 55% decrease. The pricing strategy led to a continuous decline in gross margin for six consecutive quarters to 17.4%, the lowest in four years, but better than the market expectation of 17.2%.
As of the time of writing, Tesla's stock price rose by 10.59% in after-hours trading. Analysts believe that Tesla's statement in the earnings report that it is accelerating the launch of "new models, including more affordable ones," which will "be able to be produced on the same production lines as Tesla's existing product lines," is a positive sign.
Earlier this month, Tesla announced an 8.5% decrease in deliveries and an increase in inventory, and earlier this week it also announced a series of price cuts in several key global markets. Some investors are concerned that this move may further erode its profit margins.
In addition, Tesla's prospects have also been questioned, especially after reports earlier this month that Tesla has abandoned plans for a low-cost electric car, the Model 2, and is instead focusing on autonomous driving robotaxis (Robotaxis).Tesla's valuation has historically been primarily based on hopes for mass-market electric vehicle sales and breakthroughs in autonomous driving cars. However, the company's first-quarter deliveries experienced a year-over-year decline for the first time since the pandemic.
In terms of economic data, S&P Global's data released on the 23rd showed that the U.S. manufacturing activity index for April fell to 49.9, a four-month low; the April services PMI recorded 50.9, a five-month low, indicating that the pace of overall economic expansion in the United States has slowed after entering the second quarter.
Analysts have said that the aforementioned data suggests that U.S. inflationary pressures may ease in the future. Keith Lerner, co-chief investment officer at Truist Advisory Services, stated: "The slightly weak PMI data, along with slightly weak employment, currently indicates that the market sees this as a bad news is good news situation, implying that expectations for the Federal Reserve have become overly hawkish."
In other stock news, General Motors closed up 4.37%, as the company's first-quarter earnings and revenue both exceeded market expectations, and it raised its full-year performance guidance.
Spotify Technology rose 11.48%, with its first-quarter gross profit surpassing £1 billion (approximately $1.1 billion) for the first time.
PepsiCo fell 2.91%, despite beating expectations on quarterly earnings and revenue, as the recall of some Quaker Foods grain products dragged down U.S. sales performance.
United Parcel Service (UPS) increased by 2.41%, with first-quarter profits exceeding expectations, as cost-cutting measures offset the negative impact of low demand for small package delivery.
JetBlue Airways dropped 18.77%, as the company lowered its revenue expectations for 2024, and stated that second-quarter revenue could decline by as much as 10.5% year-over-year.
General Electric increased by 8.28%, with first-quarter earnings per share and revenue both exceeding market expectations.
Novartis Pharmaceuticals rose 2.27%, as its first-quarter performance exceeded expectations across the board, and it raised its full-year guidance.This week, the U.S. stock market's first-quarter earnings season will reach its climax, with Meta Platforms being the next "big seven" company to report earnings after Tesla. The performance of these seven companies is seen as the key to whether the negative sentiment in the stock market this month can be reversed.
Driven by cost-cutting and a booming online advertising market that has pushed profit margins higher, analysts expect the company to once again achieve explosive growth in revenue for the quarter, with a year-on-year increase of 26% and a 70% increase in EBITDA.
Last week, the U.S. stock market suffered a Waterloo under the dual pressures of inflation falling into a standstill and escalating geopolitical tensions. Analysts believe that if tensions in the Middle East escalate, and the market reassesses the Federal Reserve's interest rate cuts, there is a risk of further declines in risk assets.
Standard Chartered analysts said that geopolitical tensions usually have a short-term impact on the market, and stock market pullbacks have historically been buying opportunities, unless the market anticipates a recession. So far, the first-quarter earnings reports indicate that the fundamentals of U.S. companies have improved compared to last year. The current decline in the S&P 500 index is more like a minor pullback, rather than a bear market indicative of a recession.
In terms of commodities, as the market focus shifts to OPEC, Russian supply, and global demand, oil prices rebounded significantly on the 23rd. The June delivery of West Texas Intermediate (WTI) crude oil futures on the New York Mercantile Exchange rose by $1.46, an increase of 1.78%, closing at $83.36 per barrel.
On the same day, the settlement price of gold futures fell by 0.2%, closing at $2,342.10 per ounce.