Gold prices rebound after heavy losses; U.S.-China tensions resurface
Investing.com - U.S. stock futures search for direction with corporate earnings and trade tensions in focus. Tesla’s profits fall short of estimates in the third quarter, denting shares of the electric car group lower in extended hours trading. Chipmaker Intel is due to be one of the headliners of the daily slate of corporate results, while Beyond Meat dips after-hours in the wake of a choppy session fueled by meme stock traders.
1. Futures mixed
U.S. stock futures pointed to a mixed open on Thursday, as investors eyed a raft of corporate earnings and hopes for trade agreements between the United States and China.
By 02:55 ET (06:55 GMT), the Dow futures contract had slipped by 36 points, or 0.1%, S&P 500 futures had risen by 11 points, or 0.2%, and Nasdaq 100 futures had gained 66 points, or 0.3%.
The main averages on Wall Street retreated on Wednesday. Dragging down equities were shares of Netflix, which slumped by more than 10% on a quarterly operating margin figure from the streaming giant that raised concerns around whether its valuation has become too elevated. Analog chipmaker Texas Instruments, meanwhile, unveiled a disappointing outlook for both revenue and profit, sending the stock lower by 5.6%.
Despite the relatively dour numbers, the nascent third-quarter earnings season has broadly shown signs of strength, with roughly 86% of firms who have reported so far topping analysts’ estimates. S&P 500 earnings growth for the period is seen rising 9.3% versus a year ago, on aggregate, according to LSEG data cited by Reuters.
Markets were also keeping tabs on developments in the U.S.-China trade fight. President Donald Trump said on Wednesday that he expects to notch deals with Chinese counterpart Xi Jinping when the two potentially meet in South Korea next week.
2. Tesla profits miss estimates
Tesla shares sank by more than 3% in extended hours trading after the electric vehicle giant posted earnings that fell short of Wall Street estimates, as rising sales were offset by higher costs just as the EV maker braces for slowing demand in the U.S. following the expiration of an EV tax credit.
For the third quarter, Tesla reported adjusted earnings per share of $0.5 on revenue of $28.1 billion, compared with expectations of of $0.54 a share and $26.22 billion, respectively.
Total deliveries for the third quarter jumped 7% to 497,098 from the same period a year earlier. Sales were boosted by surge in consumers rushing to secure a $7,500 EV tax credit that expired late last month. But a jump in sales was offset by higher operating expenses.
Gross margins excluding credits, a closely watched metric, came in at 17%, roughly unchanged from a year earlier.
"[I]t’s clear that margins have taken a solid hit from tariffs -- both directly through higher material costs and indirectly by forcing more ad-hoc inventory management, traditionally one of Tesla’s strengths," said Thomas Monteiro, Senior Analyst at Investing.com.
3. Intel to report
Highlighting the earnings calendar on Thursday will be Intel, which is expected to report after the closing bell.
The embattled chipmaker’s stock price has ramped up in recent weeks following a slate of capital injections, including from artificial intelligence-darling Nvidia and Japanese investment titan SoftBank. Trump announced in August that the U.S. would take a 10% stake in the business as well, even after the president said Intel CEO Lip-Bu Tan should step down because of conflicts of interest.
Despite Tan’s efforts to find partners to support a revival in Intel’s fortunes, its near-term prospects are murky. Intel has long struggled to keep up in the artificial intelligence arms race, trailing peers like Nvidia and Advanced Micro Devices, while its contract chip manufacturing business -- a target of heavy investment -- has labored behind global leader TSMC.
Intel is tipped to post roughly break-even income in the third quarter, with weakness at its data center and AI division seen contributing to a 1.2% decline in sales to $13.12 billion.
4. Beyond Meat slips amid meme-stock frenzy
Elsewhere, shares of Beyond Meat slumped by over 11% in after-hours dealmaking, reversing course following a more than 450% climb in the heavily-shorted stock so far this week.
The stock finished 1.1% lower at $3.58 following a roller-coaster session on Wednesday. It had surged earlier in the session due largely to a wave of buying among meme-stock retail traders. Some two billion of the shares exchanged hands during the day, according to FactSet data cited by the Wall Street Journal.
Just last week, Beyond Meat, which is known for its plant-based patties, was at one point hovering around $0.52, driven down by the firm’s disclosure of a notes exchange offer that was needed to help avoid near-term default.
But an announcement on Tuesday that Walmart would expand distribution of Beyond Meat’s products at thousands of the big-box chain’s stores sparked a run-up in the stock.
Over most of the past year, Beyond Meat has traded in the $2 to $4 range, as investors soured on a business grappling with weak sales, job reductions and debt.
5. Trump announces new U.S. sanctions on Russian oil giants
Trump has announced sanctions on Russia’s largest oil companies, Lukoil and Rosneft, with his administration citing Moscow’s “lack of serious commitment to a peace process to end the war in Ukraine.”
Treasury Secretary Scott Bessent added the companies funded “the Kremlin’s war machine,” and that the Treasury was prepared to take more action against Moscow.
This marks a pivot in Trump’s stance on Russia, having chosen so far not to impose any direct sanctions on the country in his second term.
The sanctions now stand to block a chunk of global oil supplies, and have helped ease concerns over a looming supply glut. This resulted in sharp gains in the benchmark oil contracts, and share price gains for Europe’s heavily-weighted energy giants.
Brent futures gained 3.3% to $64.67 a barrel, and U.S. West Texas Intermediate crude futures rose 3.5% to $60.50 a barrel.