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Tesla, GM earnings, US futures, EV sales - what's moving markets

Published 23/04/2024, 09:16
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Investing.com -- Tesla is set to start to Big Tech earnings season later in the day, while General Motors is due before the open. Futures point to a positive open on Wall Street, while the global EV market is expected to grow substantially this year. 

1. Tesla set to start Big Tech earnings season

The first of this week’s Big Tech stocks to report will be Tesla (NASDAQ:TSLA) after the close Tuesday, and the news is not likely to be good!

The electric vehicle giant earlier this month reported an 8.5% decline in deliveries and rising inventories, and only this week announced the latest in a series of price cuts globally, further eating into margins, as well as major layoffs.

The world's most valuable automaker is expected to post its first revenue drop and lowest gross margin in nearly four years, according to LSEG data.

The automaker could also face questions about its future strategy, especially after Reuters reported earlier this month that it had scrapped plans for the so-called Model 2, a low-cost vehicle, and would focus on building a self-driving robotaxi on the same small-car platform. 

Its valuation has historically been based largely on hopes for mass-market EV sales and breakthroughs in self-driving vehicles.

Investors will also be looking for news regarding its latest model, the Cybertruck, seeking guidance on whether Musk maintains his goal of producing 200,000 of these vehicles in 2025 despite struggling to mass-produce its newer 4680 batteries, which Tesla needs for the Cybertruck and hoped to deploy in other models to reduce costs.

2. Futures edge higher ahead of key earnings

U.S. stock futures edged higher Tuesday, continuing the prior session’s positive tone with attention on the tech sector as mega-cap quarterly earnings start to emerge.

By 04:05 ET (08:05 GMT), the Dow futures contract was 50 points, or 0.1%, higher, S&P 500 futures climbed 6 points, or 0.1%, and Nasdaq 100 futures rose by 25 points, or 0.1%.

The major Wall Street indices closed higher Monday, with the blue chip Dow Jones Industrial Average closing over 250 points, or 0.7%, the S&P 500 gaining 0.9% and the Nasdaq Composite indices ending 1.1% higher. Both the S&P 500 and the Nasdaq ended six-day losing streaks.

The first of the so-called Magnificent Seven group of tech giants - electric vehicle maker Tesla - is due to report after the market closes, and these results will be crucial to the direction of the S&P 500 as these companies hold the largest weightings in the index.

Elsewhere, the economic data calendar includes new home sales for March as well as both manufacturing and services PMI data from S&P Global for April.

3. GM’s first-quarter earnings due

General Motors (NYSE:GM) is set to report its first-quarter earnings before the bell, and the auto giant is expected to report solid results, largely driven by expectations that vehicle pricing remained higher than anticipated to begin the year.

Legacy U.S. automakers, including GM, have been bogged down by higher expenses related to electrifying their vehicle lineups. This has left them focusing on sales of their core gasoline-powered vehicles, from which they derive most of their profit. 

GM is likely to get a lift from strong demand for its highly profitable Chevrolet and GMC brand pickup trucks and SUVs. This could result in the company raising its annual forecasts, or, at the very least, guide toward the top of its previously announced targets. 

That said, investors will still want an update on the company’s EV plans, as well as its struggling Cruise robotaxi unit, which has lost more than $8 billion since GM acquired it in 2016, and its stock buyback program.

4. EV market set to grow strongly in 2024

Tesla, the giant electric vehicle manufacturer, may be having a hard time of it at the moment [see above], but the EV market is still set to rise strongly this year, according to a report by the International Energy Agency on Tuesday.

Electric car sales will hit 17 million this year, compared to 14 million in 2023, with more than one in five cars sold globally set to be electric, the IEA said in its Global Electric Vehicle Outlook, with 10 million of those vehicles expected to be sold in China.

"Tight margins, volatile battery metal prices, high inflation, and the phase-out of purchase incentives in some countries have sparked concerns about the industry’s pace of growth, but global sales data remain strong," the Paris-based energy watchdog said.

That said, electric cars' share of total purchases will vary widely by region, representing about one in nine vehicle purchases in the United States, one in four in Europe, but nearly half in China, the IEA forecast.

5. Crude rebounds from recent losses

Crude prices edged higher Tuesday, stabilizing after recent losses with the fluid situation in the volatile Middle East continuing to command attention. 

By 04:05 ET, the U.S. crude futures traded 1% higher at $82.70 a barrel, while the Brent contract climbed 1% to $87.85 per barrel.

Crude prices slid to over three-week lows on Monday amid growing conviction that Iran and Israel will not enter an full-scale war, despite recent missile strikes by both sides. Fears of such a scenario had been a key driver of oil price gains in recent sessions. 

Despite recent losses, oil prices were still relatively buoyant on expectations of tighter supplies in the coming months.

The Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, was seen maintaining its pace of production cuts until at least end-June, while Ukrainian strikes on major Russian fuel refineries had hit exports. 

The approaching U.S. driving season is also expected to spur increased demand in the world’s biggest fuel consumer. 

 

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