By Lisa Pauline Mattackal and Purvi Agarwal
(Reuters) – The S&P 500 and the Nasdaq rebounded on Thursday, after Tesla (NASDAQ:TSLA)’s upbeat earnings forecast lifted market sentiment following a selloff in the previous session, kicking off megacap results on a promising note.
Shares of the company soared nearly 16.7%, with the EV-maker set to add more than $100 billion to its market capitalization, after it reported robust third-quarter profits and surprised investors with a prediction of 20% to 30% sales growth next year.
This helped take the Consumer Discretionary sector 2.4% higher, topping the S&P 500’s 11 sectors.
The optimism spread to other growth stocks, with Nvidia (NASDAQ:NVDA) rising 0.8% and Meta Platforms (NASDAQ:META) gaining 0.6%.
On the flip side, Materials was at the bottom, with a 1% loss, dragged down by Newmont as higher costs and weaker Nevada output saw it miss profit estimates.
IBM (NYSE:IBM) lost almost 7% after missing estimates for third-quarter revenue, weighing on the blue-chip Dow.
Boeing (NYSE:BA) dropped 1.9% after factory workers voted on Wednesday to reject a contract offer and continue a more than five-week-long strike. Honeywell (NASDAQ:HON)’s 3.8% decline after it forecast annual sales below estimates also added to the Dow’s losses.
The Dow Jones Industrial Average fell 156.57 points, or 0.37%, to 42,358.38, the S&P 500 gained 7.94 points, or 0.14%, to 5,805.36 and the Nasdaq Composite gained 70.52 points, or 0.39%, to 18,347.18.
Wall Street ended lower on Wednesday, with the benchmark S&P 500 notching its third straight session of decline and the Nasdaq logging its worst day since early September.
Stocks have eased from record levels over the past few sessions due to a reassessment of bets on the Federal Reserve’s rate cuts, rising Treasury yields, corporate earnings and uncertainty surrounding the upcoming U.S. election.
The yield on benchmark 10-year Treasury bonds eased slightly on the day, but was still trading around its highest since late July. It touched 4.26% on Wednesday.
“We’re coming into the day after having sold off a bit every day this week. With yields taking a breather and Tesla’s positive results and guidance, markets may well be able to find some tailwinds after having been down this week,” said Art Hogan, chief market strategist at B Riley Wealth.
Meanwhile, investor focus returned to earnings season, with UPS adding 7.6% after the parcel service provider reported a rise in third-quarter profit, on rebounding volumes and cost cuts. Rival FedEx (NYSE:FDX) was up 2.4%.
Southwest Airlines (NYSE:LUV) dipped 2.5%, while American Airlines (NASDAQ:AAL) gained 3.4% after reporting earnings.
Around 32% of S&P 500 companies have reported quarterly results so far, according to data compiled by LSEG, with 79% beating earnings estimates.
On the economic front, S&P Global’s flash PMI data showed U.S. business activity increased in October, amid strong demand, and firms raised prices for goods and services at the slowest pace in nearly four-and-a-half years. Weekly jobless claims also fell unexpectedly for the week ended Oct. 19.
Advancing issues outnumbered decliners by a 1.7-to-1 ratio on the NYSE, and by a 1.44-to-1 ratio on the Nasdaq.
The S&P 500 posted 29 new 52-week highs and no new lows, while the Nasdaq Composite recorded 38 new highs and 25 new lows.