Trees don’t grow into the sky, the old proverb says. But the S&P 500 feels like a mighty oak that keeps on rising.
The index notched its 47th record close of the year on Friday. It’s up 23% since Jan. 1, and that’s on top of a 24% gain in
2023. At some point, investors have got to wonder how long the good times can last. The answer, so far, is longer.
Earnings will be key to determining how much higher the index goes. After the big banks reported
last week, things are still looking up—the rotation out of the Magnificent Seven technology stocks is continuing; other sectors are catching up, and that’s good news because it means the
market isn’t overly dependent on any one sector.
About a fifth of companies report this week, including car makers Tesla and General Motors, telecoms firms Verizon and AT&T, and Coca-Cola. The thing to look out for is how confident they are that consumers will keep spending. If American shoppers continue to splurge, there’s no reason to think the economy will be an obstacle for more stock gains, especially with the Federal Reserve on track to keep cutting interest rates in the coming months.
There are other small pieces of good news—China is keeping up its wave of stimulus with two new rate cuts. A recovery in the second-biggest economy will help. And airplane maker Boeing, which is by all accounts having a very bad year, may be on the cusp of ending a crippling strike.
But there are still warning signs that things could turn sour. While markets have been taking politics in their stride recently, the election could still create some instability. The conflict in the Middle East hasn’t
spiked oil prices, though that could change, too—and it’s already feeding demand for haven assets such as gold, which is hitting records, too.
But for now, there’s little to suggest the market’s branches are
reaching too high.
—Brian Swint
*** Join Barron’s senior managing editor Lauren R. Rublin and deputy editor Ben Levisohn today at noon when they speak with Tom Essaye, founder and president of Sevens Report, about the outlook for financial markets, industry
sectors, and individual stocks. Sign up here.
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Tesla’s Sales, Profit, Outlook Will Be Scrutinized This Week
When Tesla reports third-quarter earnings on Wednesday, investors will focus on the company’s sales and profit margins, how it’s addressing slower demand, and increased competition from Chinese
electric-vehicle makers. They’ll also look at CEO Elon Musk’s ability to deliver on promises.
- Barclays analysts said they are focused on Tesla’s demand outlook and signs of firmer profits, expecting third-quarter results to beat estimates, MarketWatch reported. Wall Street expects adjusted earnings of 60 cents a share and
automotive sales of $20.4 billion.
- Musk said he expects to roll out fully autonomous, unsupervised vehicle technology in Texas and California next year with the Model 3 and Model Y, and that Tesla expects to be producing Cybercabs before 2027. Auto-safety regulators said Friday they are looking into Tesla’s automated-driving software after four crashes.
- Tesla sold 16,692 Cybertrucks in the quarter, taking almost 50% of the U.S. market share for EV trucks, despite a high price. Competitors include
the Chevy Silverado, GMC’s Hummer and Denali, Rivian Automotive’s R1T, and Ford’s F-150 Lightning.
- General Motors is also reporting earnings this week, with analysts expecting adjusted profit of $2.38 a share and revenue of $44.7 billion. GM
expects to build about 200,000 EVs in 2024, similar to prior guidance. It built about 120,000 in the first three quarters of the year.
What’s Next: Tesla is expected to launch its lower-priced EV, often called the Model 2, in 2025. Investors hope the Model 2 boosts stagnant sales growth. If expectations for quarterly automotive sales are met, it will mark Tesla’s second straight
quarter of growth.
—Janet H. Cho and Al
Root
Musk’s Million-Dollar Voter Giveaway Questioned as Election Nears
With just over two weeks until the election, former President
Donald Trump swung through Pennsylvania while his opponent Vice President Kamala Harris met voters in Georgia as polling continues to show the two in a dead heat. Some questioned a $1 million giveaway by billionaire Elon Musk’s super PAC.
- Musk said Saturday his super PAC would randomly give $1 million daily to a voter who signed a petition, and he’s already given money away. Pennsylvania Gov. Josh Shapiro told NBC News the giveaway was “deeply concerning.” Today is Pennsylvania’s voter registration deadline.
- Both candidates received 48% support in the latest NBC News poll. Trump made campaign stops at a closed-to-the-public McDonald’s restaurant and the Pittsburgh Steelers game in swing state Pennsylvania on Sunday, while Harris made stops at two Georgia churches and marked her 60th birthday with a performance by Stevie Wonder.
- Musk, the CEO of Tesla, SpaceX, and other companies and a Trump supporter, has given $75 million to his America PAC, the only donor since July, a federal filing showed. The PAC aims at voter registration and the petition is a way to gather information for targeted ads in key states.
- The candidates are battling for votes in a handful of states, including Pennsylvania. A Wall Street Journal survey found that Harris had a slim
edge in Arizona, Michigan, Wisconsin, and Georgia, while Trump had a narrow lead in Nevada, North Carolina, and Pennsylvania.
What’s Next: Musk’s America PAC is drawing money winners from Pennsylvania voters until today and will open it up to voters in other swing states through election day. Earlier, the PAC was offering $100 to Pennsylvania voters who signed the petition and $47 to
those in other places such as Wisconsin and Michigan.
—
