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U.S. GDP ahead, Tesla warns of "lower" sales growth - what's moving markets

Published 25/01/2024, 09:32 pm
© Reuters.

Investing.com -- U.S. stock futures are muted, with traders looking ahead to crucial economic figures and gauging a stream of company earnings. Tesla (NASDAQ:TSLA) warns that sales growth will be "notably lower" this year, while Chief Executive Elon Musk details plans to roll out a new, cheaper model in 2025. Elsewhere, Boeing (NYSE:BA) shares dip premarket after the U.S. aviation regulator bans the planemaker from expanding production of its best-selling MAX family of jets.

1. Futures subdued with data, earnings in focus

U.S. stock futures hovered broadly around the flatline on Thursday, as investors awaited the release of key economic data and gauged a bevy of quarterly corporate results (see below).

By 05:00 ET (10:00 GMT), the S&P 500 futures contract had added 5 points or 0.1%, Nasdaq 100 futures were mostly unchanged, and Dow futures had inched up by 104 points or 0.3%.

The benchmark S&P 500 extended a recent rally on Wednesday, increasing by 0.1% to its fourth straight record close. Boosting the index were shares in Netflix (NASDAQ:NFLX), which surged after the streaming giant reported subscriber growth that smashed Wall Street expectations.

Solid results from Dutch chipmaking equipment manufacturer ASML (AS:ASML) also fueled an uptick in semiconductor stocks, providing some lift to the tech-heavy Nasdaq Composite. The 30-stock Dow Jones Industrial Average, meanwhile, dipped by about 0.3%.

2. U.S. GDP ahead

Traders will likely be paying close attention to the release of the key first reading of U.S. growth data for the fourth quarter, which could be an indicator of the health of the world's largest economy.

Economists are predicting that real gross domestic product (GDP) in the U.S. grew at a 2.0% annual rate in the final three months of last year, slowing from 4.9% in the third quarter.

Markets are hunting for any signs of the impact of a period of elevated interest rates on wider activity. A recent uptick in stocks has been partly fueled by hopes that the U.S. may be on course for a so-called "soft landing", in which the Federal Reserve's monetary policy tightening campaign successfully cools inflation without sparking a steep economic downturn.

Fed officials have moved to temper this optimism, suggesting that while such a scenario is becoming increasingly more conceivable, it is not yet an inevitability. The GDP figure may factor into how this outlook, although analysts at ING argued that the publication of the Fed's preferred measure of price growth on Friday will be "far more important" for rate-setters.

While the Fed is widely tipped to keep borrowing costs on hold at more than two-decade highs of 5.25% to 5.50% at its next meeting later this month, the outcome of this week's data could determine how policymakers approach potential rate cuts this year.

3. Tesla flags sales slowdown

Elon Musk's Tesla has warned that it expects to see "notably lower" sales growth in 2024 versus the prior year, as the electric vehicle giant faces intensifying competition and stalling demand from cost-conscious carbuyers.

In a presentation to shareholders, the company said it is currently "between" an initial growth wave sparked by the popularity of its Models 3 and Y, and a second that it believes will be initiated by a lower-cost, next-generation offering. Musk told analysts in a post-earnings call that the car is slated to begin production in the second half of 2025, adding that it will feature "revolutionary manufacturing technology."

Musk also flagged that margins, a crucial gauge of Tesla's core operations, "will be good" if interest rates come down quickly and "won't be that good" if they do not. "[W]e don't have a crystal ball, so it's difficult for us to predict this with precision," he noted.

Tesla's stock price slipped in premarket U.S. trading on Thursday. Shares in major Chinese EV makers also fell after Musk warned that these groups would "demolish" their foreign rivals without trade barriers, feeding concerns over eventual export restrictions on the sector.

Tesla's announcement comes as several other big-name U.S. businesses are due to unveil their latest quarterly earnings. On Thursday, carriers American Airlines (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV) are set to report before the bell, while payments firm Visa (NYSE:V) and chipmaker Intel (NASDAQ:INTC) will post results after markets close in New York.

4. FAA halts Boeing 737 MAX expansion

The U.S. aviation regulator has said that it will not let Boeing expand production of its 737 MAX jet, in the latest blow to the planemaker following a dangerous mid-air breach on its MAX 9 model earlier this month.

Shares in Boeing inched down premarket on Thursday.

The Federal Aviation Administration said in a statement that the move, which will halt the output of one of Boeing's most popular line of planes, is needed to "ensure accountability and full compliance" by the company with quality control procedures. Fresh concerns have arisen around the safety of Boeing's planes after a non-fatal fuselage blowout on a MAX 9 operated by Alaska Airlines on Jan. 9.

It was still unclear how the FAA's decision would hit Boeing's production plans or its finances. The MAX fleet includes the MAX 8, a key source of revenue for Boeing.

However, the FAA gave the green light for MAX 9 jets to return to skies once they have passed safety inspections.

"The exhaustive, enhanced review our team completed after several weeks of information gathering gives me and the FAA confidence to proceed to the inspection and maintenance phase," said FAA Administrator Mike Whitaker in a statement.

5. Crude rises after U.S. inventories draw

Oil prices climbed higher Thursday, boosted by U.S. crude inventories falling more than expected last week as well as stimulus measures from top importer China.

By 05:00 ET, the U.S. crude futures traded 1.57% higher at $76.22 a barrel, while the Brent contract climbed 1.3% to $81.11 per barrel, trading once more above the widely-watched $80 a barrel level.

U.S. crude stockpiles tumbled by a hefty 9.2 million barrels last week, according to the Energy Information Administration, but this figure was impacted by the harsh winter weather which shut in refineries and kept motorists off the road.

Output of U.S. crude fell from a record 13.3 million barrels per day two weeks ago to a five-month low of 12.3 barrels per day last week.

Elsewhere, the People’s Bank of China on Wednesday unexpectedly cut reserve requirements for local banks, freeing up more liquidity in another attempt to foster economic growth in the world’s largest oil importer.

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