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The stock market gained ground on Thursday morning, despite Tesla‘s (TSLA) skid on earnings. Strong earnings from AT&T (T), IBM (IBM) and chip equipment maker Lam Research (LRCX) buoyed stocks, but American Airlines (AAL) slid as revenue barely beat estimates.
X
The Nasdaq composite gained 0.6%. The Dow Jones Industrial Average rose 0.9% and the S&P 500 gained 0.7%. The small-cap Russell 2000 also rose, up 0.9%.
Volume surged on the Nasdaq and on the NYSE vs. the same time on Wednesday.
The yield on the benchmark 10-year Treasury note continued to climb Thursday, rising three basis points to 4.17%. The 10-year yield is closing in on a 15-year high.
U.S. crude oil rose 1% to 86.40 per barrel.
The number of people who applied for unemployment benefits fell by 12,000 to a three-week low of 214,000, as more folks returned to work after Hurricane Ian disruptions. Econoday had estimated jobless claims would rise to 235,000.
Economic Data Points To Risk Of Recession
“Looking through the volatility caused by hurricane season, initial claims have held quite low recently and reversed most of their move higher between April and August,” said Bill Adams, chief economist for Comerica Bank.
Meanwhile, other economic indicators show the economy is slowing. The Philadelphia Manufacturing Index slid 8.7 points, below the -5 consensus but better than September’s 9.9-point drop. And the Conference Board’s Leading Indicators declined 0.4%, lower than the Econoday consensus of a drop of 0.3%.
“Recession risks keep rising,” said Jeffrey Roach, Chief Economist for LPL Financial. “If the economy falls into recession, the cause will likely be from the consumer sector retrenching after years of inflationary pressures, high housing costs, and slow real wage growth.”
Existing home sales in September declined to 4.71 million from 4.78 million in August, higher than the Econoday estimate of 4.695 million.
Asian stock markets fell across the board, with the Hang Seng, Shanghai and Nikkei 225 indexes all flashing red. In Europe, the London FTSE 100, the German DAX and the Paris CAC 40 all climbed.
The Innovator IBD 50 ETF (FFTY) gained 1%.
Tesla Slides
Tesla earnings topped expectations late Wednesday, though revenue came in on the soft side. Shares fell more than 7%.
CEO Musk predicted an “epic” Q4 but appeared to shift goal posts on Tesla’s full-year delivery target. He also said a “meaningful buyback” was likely in 2023, throwing out $5 billion to $10 billion as realistic, even in a difficult year.
EPS beat estimates by 5 cents, rising 69% from a year ago to $1.05 per share. Revenue of $21.45 billion, up 56% from a year ago, fell short of $22.3 billion estimates.
Last week, Tesla shares closed at their lowest level since June 2021.
In other news, Philip Morris (PM) raised its offer for Swedish Match by 9.4% and has agreed to pay $2.7 billion to regain the U.S. rights for its IQOS heated tobacco products from Altria Group (MO), the Wall Street Journal reported. PM stock pays a hefty 5.87% annual dividend yield.
Other Earnings Support Market
Aside from Tesla, the momentum of third-quarter earnings reports picked up, with strong results from AT&T, Dow Jones component IBM, and Lam Research.
AT&T (T) reported September-quarter earnings and revenue that topped estimates, adding more wireless postpaid phone subscribers than expected. Earnings excluded DirecTV and WarnerMedia, spun off in early April.
T stock rose more than 8% on the news.
The telecom giant said third-quarter adjusted earnings from continuing operations were 68 cents, up 3% from a year earlier. Revenue from continuing operations fell 4.1% to $30 billion.
Stock market analysts had projected AT&T earnings of 61 cents per share on revenue of $29.8 billion, according to FactSet.
AT&T stock had retreated 15% thus far this year, ahead of the earnings report. As of Wednesday’s close, the telecom stock owned a dismal 29 Relative Strength Rating out of a best-possible 99, according to IBD Stock Checkup.
Stocks Hit Resistance As Yields Soar; Snap Crashes Again
Stock Market Today: Other Movers
IBM (IBM) reported third-quarter results that beat analyst expectations, as the tech giant boosted its full-year revenue outlook. IBM stock jumped more than 4% on the news.
The company reported adjusted earnings of $1.81 per share on revenue of $14.1 billion. Analysts expected IBM to report $1.79 EPS on revenue of $13.55 billion, according to FactSet.
Lam Research beat Wall Street’s targets for the September-ended quarter and guided higher for the current period. But it warned that U.S. export restrictions on China will hurt sales next year. Lam shares gained more than 8%.
Alcoa (AA) earnings and sales came in below Wall Street estimates. Still, shares of the metals mining giant reversed after trading lower by as much as 4.3%, gaining more than 6%.
American Airlines (AAL) easily beat Wall Street earnings estimates but reported mixed revenue. AAL stock slid more than 2%.
AAL shares remain barely above their 50-day moving average, according to MarketSmith chart analysis, and are still well below pre-pandemic levels.
Follow Michael Molinski on Twitter @IMmolinski
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