Tesla impresses, U.S. 4Q GDP due, Meta reinstates Trump - what's moving markets

© Reuters

By Geoffrey Smith 

Investing.com -- Tesla surges 7% in premarket trading after an upbeat outlook for the year from CEO Elon Musk, helping the broader market higher. It's peak earnings season, with updates from Dow Chemical , American Airlines and - after the bell - Intel, to name but three. The U.S. will report its first reading for fourth-quarter GDP, which is expected to show a clear slowdown in growth at the end of last year. Meta is reinstating Donald Trump's Facebook account. And oil prices hit resistance after a 10% rally over the last three weeks. Here's what you need to know in financial markets on Thursday 26th January. 

1. Tesla surges as Musk hails effect of price cuts

Tesla (NASDAQ:TSLA) stock rose 7% in premarket trading after Elon Musk said this month’s price cuts had revived demand for its electric vehicles, putting it on course for a year of solid – if slightly slower – growth in sales and profits.

Consensus forecasts for Tesla’s fourth-quarter revenue and profits had already been revised down sharply in light of production and logistics disruptions in China at the end of last year, which meant that revenue of $24.3 billion was barely up on the previous quarter. Profit of $3.7 billion was the company’s higher ever, but fractionally short of revised market forecasts.

Musk’s comments at a conference call after the results suggested deliveries (or production, it wasn’t clear which) of 1.8 million cars this year, which would represent growth of some 37% from 2022 – below the company’s 50% target. While production of its pickup truck is set to start later this year, high-volume output won’t start until 2024, Musk said.

2. U.S. GDP growth seen slowing to 2.6% in 4Q; jobless claims, new home sales data also due

The U.S. will report its first reading for fourth-quarter gross domestic product at 08:30 ET (12:30 GMT), just under a week before the Federal Reserve meets to adjust its monetary policy settings.

Analysts expect growth to have slowed to an annualized rate of 2.6% from 3.2% in the third quarter, as raging inflation and higher financing costs ate into consumer spending and disposable income.

The Labor Department will publish jobless claims data at the same time, while there are also numbers due on durable goods. December’s new home sales data and the Kansas City Fed regional business survey follow at 10:00 ET.

3. Stocks set to open higher amid earnings deluge; Dow disappoints but Northrop and Valero beat

U.S. stock markets are set to open higher, with Tesla’s earnings and outlook helping selected technology stocks in particular to outperform. Industrials lagged, however, after Dow Chemical's (NYSE:DOW) disappointing update.

By 06:30 ET, Dow Jones futures were essentially flat, but S&P 500 futures were up 0.2%, while Nasdaq 100 futures were up 0.6%.

The gain across Tech wasn’t universal: IBM (NYSE:IBM) and Lam Research (NASDAQ:LRCX) both fell after missing forecasts in their updates late on Wednesday.

A cast of thousands reports earnings in the course of the day, with Mastercard (NYSE:MA), Comcast (NASDAQ:CMCSA), Archer Daniels Midland (NYSE:ADM) and American Airlines (NASDAQ:AAL) all offering a broad snapshot of the economy. Valero (NYSE:VLO) and defense giant Northrop Grumman (NYSE:NOC) are both looking good after stronger-than-expected reports. After the bell, Visa (NYSE:V), Intel (NASDAQ:INTC), KLA Corp (NASDAQ:KLAC) and L3Harris (NYSE:LHX) are all up.

4. Buzzfeed on a tear after Meta report

Also in focus later will be BuzzFeed (NASDAQ:BZFD) stock, which surged 30% on reports that Facebook owner Meta (NASDAQ:META) is to pay the company an unspecified, but probably large, amount to help it bolster content on its social media sites.

Meta was also in the news for saying it will reinstate the Facebook page of former President Donald Trump, whom it suspended in the aftermath of the Jan 6th, 2021 assault on the Capitol. It warned that Trump will face stiffer sanctions for repeated breaches of its user code.                                       

5. Oil consolidates ahead of OPEC+ meeting

Crude oil price consolidated, running into resistance around the $81 a barrel level after a 10% rally in the last three weeks, in which fears of a global economic slowdown have been offset by the outlook for a Chinese-specific increase in demand and, not least, a weaker dollar that makes oil purchases cheaper for big importers such as China and India.

The latest U.S. inventory data were a fraction more bullish than expected, but are unlikely to move the dial as the market looks forward to next week’s meeting of OPEC and its allies.

By 06:40, U.S. crude prices were up 0.8% at $80.78 a barrel, while Brent was up 0.8% at $86.79 a barrel.