Tesla Earnings Were Bad But Market Finds Reason For Optimism

Key Takeaways

• Tesla TSLA Stock Rallies Despite Weak Numbers
• Chip Stocks Up Following Texas Instruments Earnings
• Meta Platforms Reports After Close

After six consecutive days of losses, stocks are trying to demonstrate their resiliency ahead of a heavy onslaught of earnings. On Tuesday, the S&P 500 gained 1.2% and the Nasdaq Composite added 1.6%.

One of this year's worst performing stocks in the S&P 500 has been Tesla. Heading into earnings on Tuesday, the stock was down around 40%. After the close, the company reported earnings showing a significant drop in first quarter revenues and profits. However, the drops weren't as bad as expected and the company announced plans to accelerate the launch of a new affordable vehicle. It really felt like most of the potential worst-case scenarios had been baked into the stock price in the days leading up to first quarter earnings. During the regular trading session on Tuesday, Tesla shares rallied 1.8% and have since added another 14% in premarket trading.

Continuing on with earnings, Boeing BA is out this morning with their first quarter numbers. The company reported better than expected numbers and also said their 737 Max supply chain is beginning to stabilize. In premarket trading, the stock is up 3.5%. Texas Instruments TXN is also out with positive earnings, boosting optimism for chip stocks. After a long slump in the semiconductor sector, a resurgence of demand could bode well for companies such as Nvidia, Advanced Micro Devices AMD , Arm Holdings, Intel INTC and Micron. Shares of Texas Instruments are higher by around 7% in premarket.

There is also some economic news this morning. Durable Goods orders for March were forecast to be up 2.5% on a month-over-month basis and came in at 2.6%. Core CORE Durable Goods were up 0.2%, slightly below expectations of 0.3%. Markets seemed to have little reaction when the number came out and are instead more focused on earnings.

For today, I'll be watching to see if the positive reactions in Tesla, Boeing and Texas Instruments holds and equally important, if it can carry over into the broader market. As I've mentioned a number of times, fundamental valuations heading into earnings season were extended a bit. We've also lost enthusiasm for potential rate cuts until later this summer. Therefore, if the market momentum is going to continue, we're going to probably need some optimism where earnings are concerned. I'm also keeping an eye on bitcoin. Prices in the crypto space had recently fallen along with equities. However, just as equities have staged a comeback thus far this week, so too has bitcoin which is trading above $66 thousand, but down slightly in premarket.

After the close tonight, Ford, IBM IBM and Meta Platforms FB are all scheduled to report. Meta is the one I'm most interested in as it will likely dominate the market's attention. That stock has an expected move of $42 by Friday. Then before the open on Thursday, American Airlines AAL and Caterpillar are among the bigger names reporting. As always, I would stick with your investing plans and long term objectives.

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