Earnings Carried the Market for a Day, and the Real Test Comes After the Close
Wall Street closed higher on Wednesday, with all three major indexes finishing in positive territory. The Nasdaq rose 1.1 percent, the Dow gained 0.7 percent and the S&P 500 added 0.6 percent. With the Federal Reserve in its quiet period ahead of next week’s meeting, the market is moving this week on corporate earnings alone, without economic data or policy remarks to guide it.
Two Musk Companies Pulled the Indexes Higher
Two of Elon Musk’s companies sat at the center of the advance. SpaceX closed up 7.8 percent at $159.31. Its third-quarter results, released the day before, confirmed the company’s first quarterly profit since going public, and Musk’s statement that both boards have formed special committees to review a merger with Tesla pushed the stock higher for a second day.
Tesla also climbed ahead of its earnings report, closing up 3.4 percent at $386.47. The gain owed less to car sales than to the mood SpaceX created spreading to Tesla. AI server maker Super Micro Computer rose 9 percent as the effect of its sharply raised quarterly revenue outlook continued, and Nvidia gained 2 percent. The SOXX exchange-traded fund, which bundles semiconductor stocks broadly, also rose 2 percent. The rebound in chip stocks, which fell more than 11 percent last week, has now run for three days.
Companies That Fell Even After Reporting Earnings
On the other side, earnings reports proved to be poison for some stocks. AT&T fell 6.5 percent, the biggest decline in the S&P 500, despite results that beat expectations. Netflix dropped more than 5 percent after its profit topped forecasts but it lowered its advertising revenue target, disappointing investors. Abbott Laboratories fell 2 percent.
The moves show where the bar sits this earnings season. Beating expectations with the numbers alone is not enough. A stock survives only if the outlook for the next quarter does not bend downward, which is why companies keep falling even after beating earnings.
Tonight Is the Peak of the Week
The real test begins as soon as the market closes. Tesla, Meta and IBM are set to release their third-quarter results in turn.
For Tesla, the points to watch are auto margins and the merger. Delivery numbers were already released early this month and are known to the market, so questions on the call are likely to concentrate on how far the merger review with SpaceX has come and how fast the robotaxi expansion is moving. Musk’s answers could move both Tesla and SpaceX shares together tomorrow.
For Meta, spending matters more than profit. How much more the company plans to spend on AI infrastructure is the market’s focus, and it connects directly to the question that shook semiconductor stocks last week, whether data centers built with borrowed money and enormous capital spending turn into profit. On top of that came a report today of a $25 billion damages verdict in a New Mexico data privacy lawsuit. An appeals process remains, so the amount is not final, but the bad news landed on earnings day and will be hard to avoid on the call.
The bond market was quiet. The 10-year Treasury yield barely moved around 5.1 percent. The Fed’s rate decision comes next Wednesday, and the market is leaning toward a hold. Until then, earnings reports will set the market’s direction.
