The unexpected financial report stimulated Tesla's post market surge.
On Wednesday, October 23rd local time, the three major US stock indexes collectively closed down. As of the close, the Dow Jones Industrial Average fell 0.96%, the Nasdaq fell 1.60%, and the S&P 500 index fell 0.92%. The Federal Reserve's Beige Book shows that overall, there has been little change in economic activity in almost all regions since early September, although two regions have reported moderate growth.
Tesla's US stock surged over 11% after trading. The financial report shows that Tesla's third quarter profit exceeded expectations, and Musk predicts that Tesla's car sales will increase by 20% to 30% next year.
The three major stock indexes in the US stock market generally fell
On Wednesday, October 23rd local time, the three major US stock indexes collectively closed down. As of the close, the Dow Jones Industrial Average fell 409.94 points, or 0.96%, to 42514.95 points; The Nasdaq fell 296.48 points, or 1.60%, to 18276.65 points; The S&P 500 index fell 53.78 points, or 0.92%, to 5797.42 points.
David Lauter from Abound Financial said, "The profit season is heating up. We believe that the stock market will continue to rise in the future, especially now that we are entering a strong seasonal period in the market
Despite the possibility of more volatility in the market as the earnings season deepens and the November election approaches, the long-term outlook for the market remains solid. Although this week's trend reminds us that even the strongest trend can face setbacks, so far it has been a normal pullback for major indices, "said Daniel Skelly from Morgan Stanley's wealth management department
In my opinion, this is all due to the impact of high interest rates. The market is re pricing the possibility of the Federal Reserve's massive interest rate cuts, and some economic sectors have not yet felt the impact of rate hikes, but the longer interest rates remain high, the more these sectors need to readjust to adapt to this reality... The economy is already imbalanced, "said Brent Shutter, Chief Investment Officer of Northwestern Mutual.
In terms of other news, the Federal Reserve's Beige Book shows that overall, economic activity has remained relatively stable in almost all regions since early September, although two regions have reported moderate growth.
In other markets, US Treasury yields collectively rose, with 2-year yields up 5 basis points to 4.093%, 3-year yields up 5.4 basis points to 4.041%, 5-year yields up 5 basis points to 4.063%, 10-year yields up 3.8 basis points to 4.251%, and 30-year yields up 2.3 basis points to 4.522%.
International precious metal futures closed sharply lower, with COMEX gold futures falling 1.12% to $2729.0 per ounce and COMEX silver futures falling 3.3% to $33.885 per ounce.
International oil prices fell, and as of the close of the day, the price of light crude oil futures for December delivery on the New York Mercantile Exchange fell 97 cents, closing at $70.77 per barrel, a decrease of 1.35%; The London Brent crude oil futures price for December delivery fell by $1.08, closing at $74.96 per barrel, a decrease of 1.42%.
Tesla's financial report exceeds expectations, Arm Qualcomm disputes escalate
In terms of sectors, the 11 major sectors of the S&P 500 index fell 9 times and rose 2 times. Among them, the non essential consumption sector led the decline, with a decrease of 1.82%, while the information technology and communication services sectors fell by 1.68% and 1.32% respectively; The real estate and public utilities sectors both rose by over 1%.
Popular technology stocks have generally fallen. Arm fell over 6%, Qualcomm, Broadcom, and Meta fell over 3%, Nvidia, Amazon, Micron Technology, and Apple fell over 2%, Tesla and Netflix fell nearly 2%, Intel, ASML, Google A, AMD, and Oracle fell over 1%, AMD Semiconductor, Microsoft, Lilly, and Cisco fell slightly, TSMC rose over 1%, and Texas Instruments rose over 4%.
Tesla fell 1.98%, but due to better than expected financial performance, its stock price surged over 11% after hours.
After Wednesday's closing, Tesla released its third quarter financial report. According to the financial report, Tesla's third quarter revenue was $25.18 billion, with analysts expecting $25.43 billion, compared to $23.35 billion in the same period last year; Adjusted earnings per share for the third quarter were $0.72, with analysts expecting $0.60; The gross profit margin for the third quarter was 19.8%, with analysts expecting 16.8%; The operating profit for the third quarter was 2.72 billion US dollars, with analysts expecting 1.96 billion US dollars; Free cash flow for the third quarter was $2.74 billion, with analysts expecting $1.61 billion. Tesla expects a slight increase in car deliveries in 2024; Cybertruck achieves positive gross profit margin for the first time; Tesla's Shanghai Gigafactory is expected to deliver Megapacks in the first quarter of 2025; The Texas Gigafactory has achieved early deployment of 29000 sets of H100, and is expected to deploy 50000 sets of H100 by the end of October; In the first half of 2025, affordable models will be released.
(Tesla Q3 financial report. Source: Tesla)
Tesla CFO Vaibaf Tanejia stated that the cost per unit vehicle hit a historic low in the third quarter, which is a trend that the company is focusing on. Vaibaf Tanejia stated that the company will continue to focus on cost reduction; Due to the release of FSD functionality, the profit margin of the automotive business has increased. Considering the current economic environment, Waibaf Tanneja believes that maintaining automotive profit margins in the fourth quarter will face "challenges". In addition, Waibaf Taneja stated that although Tesla's pure electric semi-trailer truck Semi is still in the trial production stage, demand is quite strong.
Musk stated that when Tesla's affordable electric vehicle models are launched, the unit price will be less than $30000; Tesla will not produce cheap cars lacking autonomous versions; A conventional $25000 electric car would be 'meaningless'. In addition, he predicts that Tesla's car sales will increase by 20% to 30% next year; Cybercab will achieve large-scale production by 2026, with the goal of producing at least 2 million units annually; The company is expected to launch ride hailing services (shared mobility services) in Texas and California in the United States by 2025, and is awaiting regulatory approval.
Apple fell 2.16%. On Wednesday local time, Apple released a series of beta versions of its smart features, including the long-awaited ChatGPT integration. This summer, the company announced its response to the artificial intelligence craze, but has been slow to roll out its AI features to users. Investors hope that artificial intelligence features will stimulate the wave of iPhone upgrades, as these tools are only available on newer devices.
In addition, according to informed sources, Apple is about to produce a new MacBook Air equipped with M4 chips, which will be released in early 2025. Although progress has been made on the MacBook Air, the company has postponed the release of the new high-end Mac Studio, a desktop computer for professionals without a display screen. In addition, Apple is also preparing to launch an entry-level iPad.
Nvidia fell 2.81%. Nvidia CEO Huang Renxun announced on Wednesday that the design flaws of its latest Blackwell AI chip have been fixed with the help of TSMC. Previously, this defect affected the production of chips, resulting in delayed releases and impacting customers such as Meta, Google, and Microsoft. Huang Renxun stated that the low chip yield caused by design defects is entirely the responsibility of Nvidia. However, he denied reports of tension between Nvidia and TSMC due to delays, calling it "fake news". He emphasized that TSMC played a key role in restoring chip production. Huang Renxun revealed that the Blackwell chip uses a combination of two silicon wafers, which will increase performance by 30 times.
In addition, Huang Renxun released a new supercomputer called Gefion in Denmark on Wednesday, which has 1528 graphics processing units (GPUs) and is jointly built by the Novo Nordisk Foundation, the Danish Export Investment Fund, and Nvidia.
Arm fell 6.67%, while Qualcomm fell 3.80%. According to Bloomberg on Wednesday, the legal dispute between Arm and Qualcomm has escalated, with Arm deciding to cancel the architecture license agreement that allowed Qualcomm to use its intellectual property to design chips. According to relevant documents, Arm has issued a 60 day license termination notice to Qualcomm, which will seriously affect Qualcomm's chip design and production. Qualcomm relies on Arm's technology to provide processors for its hundreds of millions of Android smartphones, a decision that could result in Qualcomm having to halt sales of related products or face significant compensation.
This dispute originated in 2022, when Arm sued Qualcomm for breach of contract and trademark infringement. The core controversy revolves around Qualcomm's acquisition of Nuvia, a chip design startup authorized by Arm, in 2021. Arm believes that Qualcomm failed to renegotiate the licensing terms and demanded that Qualcomm destroy the related products designed by Nuvia before the acquisition. Qualcomm stated that the existing agreement covers Nuvia's activities and accused Arm of attempting to increase licensing fees by revoking licenses.
Analysts believe that this move may disrupt the smartphone and personal computer markets, and affect the operations and finances of both companies. This dispute may ultimately end with a new licensing agreement, but Qualcomm will need to pay higher licensing fees than Nuvia did before.
Most financial stocks have fallen. Mizuho Financial fell more than 3%, UBS Group, Deutsche Bank, BlackRock, and First Capital Financial rose more than 1%, Citigroup, Travelers Insurance, American Express, Wells Fargo, Visa, JPMorgan Chase, Goldman Sachs, and Morgan Stanley fell slightly, regional finance closed flat, Bank of America, Mastercard, and American International Group rose slightly, and United Bank of America rose more than 1%.
Energy stocks have seen more declines than gains. Apache Oil and Empire Oil fell more than 2%, Murphy Oil, Petrobras, and Western Petroleum fell more than 1%, BP, Shell, Marathon Oil, ConocoPhillips, ExxonMobil, and Chevron fell slightly, while Schlumberger, Duke Energy, and US Energy rose slightly.
Most popular Chinese concept stocks fell, with the Nasdaq China Golden Dragon Index dropping 1.20%. New Oriental fell over 8%, Pinduoduo fell over 4%, Futu Holdings fell over 3%, Alibaba and Baidu fell over 2%, iQiyi, Tencent Music, Huya, Manbang, Weibo, NetEase, and Douyu fell over 1%, JD.com, NIO, and Bilibili fell slightly, Vipshop rose nearly 1%, Xiaopeng Motors rose over 1%, Miniso rose over 2%, and Ideal Auto rose over 3%.
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