ASX Prepares for Flat Start Amid Mixed Results on Wall Street; Tesla Gains While IBM Declines

On October 25, 2024, Wall Street closed with mixed results after major US companies released their profit reports. Tesla had an impressive day, seeing its stock rise significantly, while IBM faced a troubling decline.

Wall Street Overview

The S&P 500 managed a slight gain of 0.2%, breaking a three-day losing streak that had begun earlier in the week. Throughout the day, the index fluctuated between gains and losses, showing a nearly equal split in stock performances.

Meanwhile, the Dow Jones Industrial Average fell by 140 points, equating to a 0.3% decrease, while the tech-heavy Nasdaq composite saw a rise of 0.8%. As a result, the Australian share market is signaling a positive opening, with futures indicating a possible increase of 15 points, or 0.2%.

Tesla's Strong Performance

Tesla emerged as a standout performer on the market after its stock surged by 21.9%. The electric vehicle manufacturer reported quarterly profits that exceeded expectations, and CEO Elon Musk expressed optimism for projected sales growth of 20% to 30% in the upcoming year. However, Tesla's revenue for the recent quarter was below what analysts had forecasted, despite this being the highest increase in its stock price since 2013.

Similarly, UPS saw a rise of 5.3% after posting profits that surpassed analysts' expectations, indicating robust performance across various sectors it serves.

IBM's Decline and Market Reactions

On the other hand, IBM reported disappointing figures, with a revenue decline that fell short of analyst forecasts, contributing to its stock dropping 6.2%. This underperformance was a significant factor in pulling the Dow down compared to other indices.

Boeing's stock also dipped by 1.2% as the strike by its machinists continued, which has significantly impacted aircraft production. Over 60% of union members voted against a proposed contract, prolonging the work stoppage that has lasted six weeks.

Union Pacific Corporation's stock fell by 4.4% after it reported slightly weaker profits and revenues than expected, adding to the day's mixed feelings in the market.

Market Context and Economic Indicators

In relation to the broader economic context, this week has seen a regression in stock prices after the S&P 500 and Dow set new records last week. Rising Treasury yields in the bond market, which put pressure on stock valuations, have been a contributing factor, especially with many investors reconsidering stock prices that have risen rapidly compared to corporate profits.

Despite some challenges, recent reports suggest that the US economy remains stronger than anticipated, providing hope that it may avoid the severe recession many had feared, despite soaring inflation rates.

The unexpected resilience of the economy has led traders to revise their predictions regarding the Federal Reserve's approach to interest rates, which may not drastically decrease as initially expected. This adjustment has led to Treasury yields experiencing fluctuations throughout the day.

A report released concerning unemployment claims indicated a mixed job market. Fewer individuals applied for unemployment benefits, suggesting a lower rate of layoffs; however, there was an increase in the total number of people receiving benefits, reaching the highest level seen in almost three years.

Global Market Performance

Internationally, stock indexes saw modest gains in Europe after a mixed performance across Asia earlier in the day.

WallStreet, Tesla, IBM