Source : the age
The US stock market rose following strong profit reports from SpaceX, Capital One Financial and other big companies, while Meta and Tesla delivered results after the closing bell.
The S&P 500 added 0.6 per cent and pulled within 0.8 per cent of its all-time high set earlier this month. The Dow Jones Industrial Average gained 360 points, or 0.7 per cent, and the Nasdaq composite climbed 1.1 per cent.
The Australian sharemarket is set to dip, with futures pointing to a loss of 1 point at the open. The ASX added 0.2 per cent on Wednesday. The Australian dollar is stronger at US70.28¢ at 5.25am AEDT.
SpaceX helped lead the market and climbed 7.8 per cent after reporting a stronger profit than analysts expected. Elon Musk, who runs the company that makes money from artificial-intelligence technology, rockets and other businesses, also said that SpaceX took a step to consider a possible merger with Tesla, his electric-vehicle company.
Musk’s Tesla beat Wall Street estimates for third-quarter revenue as a rebound in vehicle deliveries and growth in its energy storage unit lifted sales, even as heavy spending on AI and robotaxis weighed on profit. Its shares rose more than 1 per cent in extended trading after a 3.4 per cent gain in regular trade on Wednesday.
The automaker reported revenue of $US28.05 billion ($40 billion) for the three months ended September 30, compared with analysts’ average estimate of $US27.88 billion, according to data compiled by LSEG. Revenue was $US28.10 billion in the year-earlier quarter.
Meta beat Wall Street estimates in its third-quarter earnings, reporting revenue of $US64.6 billion for the quarter, up 26 per cent from a year earlier. Meanwhile, a judge has ordered Meta to pay New Mexico $US25 billion after a jury found the company liable for deceiving users about privacy and content moderation policies on Facebook.
Judge Francis Mathew handed down the amount. The state had sought $US35 billion to $US40 billion. Jurors in September found Meta liable for over 43 million violations of New Mexico consumer protection laws when a political consulting firm, Cambridge Analytica, harvested Facebook user data to generate targeted political ads for the 2016 election. Meta will release its results after the closing bell.
Other stocks rallying on profit reports that topped analysts’ expectations included Capital One Financial, which rose 2.5 per cent, and Winnebago Industries, which climbed 10.7 per cent.
Expectations are high for profit growth for all kinds of companies during the summer, and they need to meet them to justify the big runs their stock prices have made despite worries about high inflation, higher interest rates and other challenges weighing on Wall Street.
Winnebago was able to report a more resilient profit than expected even as high fuel prices and frustration among US shoppers restrain interest in recreational vehicles, for example. CEO Michael Happe said its more expensive towable RVs are a tougher sell, but customers are interested in its “more accessible” offerings.
On the losing side of Wall Street was Netflix, which fell 5.3 per cent even though the streaming service reported a stronger profit than analysts expected. Investors focused instead on worries that Netflix’s momentum may be slowing. The company’s forecast for revenue growth in the final three months of the year fell short of analysts’ expectations.
AT&T fell 6.4 per cent even though it likewise delivered a stronger profit for the latest quarter than analysts expected. It gave a forecast for growth this year in an underlying measure of earnings before income taxes and some other things that fell short of some analysts’ expectations.
Among AI stocks, which have been at the centre of the market’s action in recent weeks, the movements remained unsettled.
After leading the rest of the market for years because of the frenzy around AI, stocks in the industry have become shaky on worries that the build out of data centres may slow because of how much more expensive it’s become to borrow money.
CoreWeave, which has borrowed money to buy AI chips that it rents out to customers over the cloud, has been particularly volatile. Its stock bounced between an early gain of nearly 4 per cent and a drop of 4.5 per cent Wednesday morning before finishing with a dip of 0.5 per cent. A day earlier, it careened between a gain of 5 per cent and a drop of more than 6 per cent.
Other AI-linked stocks were more resilient, and Nvidia’s rise of 2.5 per cent was the strongest force lifting the S&P 500.
Besides SpaceX’s profit report showing strength for AI spending, another encouraging signal for the industry came from Super Micro Computer, which sells AI servers and services. It said it expects to report stronger revenue for the summer than it had earlier forecast because of “increased demand for AI platforms,” and its stock rallied 9.5 per cent.
All told, the S&P 500 rose 44.60 points to 7,757.17. The Dow Jones Industrial Average added 360.21 to 52,856.09, and the Nasdaq composite climbed 278.04 to 26,702.86.
In the bond market, the yield on the 10-year Treasury erased an early dip and climbed back to 5.12 per cent, where it was late Tuesday.
It swung with oil prices, which remained unsteady. The price for a barrel of Brent crude drifted between $US108 and $US111 before settling at $US108.82.
It’s been yo-yoing between $US97 and $US112 through October on uncertainty about when the war with Iran will allow the global energy industry to return to normal.
In stock markets abroad, indexes rose in Europe following a mixed finish in Asia. South Korea’s Kospi jumped 3.3 per cent for one of the world’s biggest moves as AI stocks regained strength.
AP
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