US stocks climbed on Wednesday as investors positioned for results from two of the market’s biggest names. The first read on the Wall Street Tesla earnings report was mixed, though, with shares of the electric-car maker slipping in after-hours trading despite a better-than-expected quarter.
How the major indices finished
The Nasdaq Composite led the advance, gaining 278 points, or 1.05 percent, to close at 26,703. The Dow Jones Industrial Average rose about 0.7 percent to 52,856, and the S&P 500 added about 0.6 percent to 7,757. The market’s fear gauge, the VIX, eased to about 16.7.
Gains came despite a stubbornly high oil price, with Brent crude around $110 a barrel, and Treasury yields above 5 percent on the 10-year note. Investors have been trying to separate two stories: a resilient earnings season and a macro backdrop that offers few comforts. Wednesday favoured the first.
Tesla: a beat that did not satisfy
After the closing bell Tesla reported third-quarter revenue of $28.05 billion, a touch above analyst forecasts of roughly $27.9 billion. Adjusted earnings came in at 48 cents a share against expectations of 45 cents. One analyst noted that stronger margins, not higher sales, drove the surprise, and that it was the first time in a while that Tesla had beaten on profit.
Deliveries rebounded to 486,532 vehicles, well above the roughly 461,000 that Wall Street expected, though still about 2 percent below a year earlier. The Model 3 and Model Y made up almost all of them. Cybertruck and other models accounted for just 8,295 deliveries, down from more than 12,000 in the second quarter.
Production was about 464,000 vehicles, meaning Tesla delivered more than it built for a second straight quarter and drew down inventory. Energy storage sales also helped the top line.
Still, heavy spending on artificial intelligence and robotaxis weighed on profit, and the shares fell more than 3 percent in extended trading from a close of $386.47. They have lost about 14 percent this year, although Tesla’s market value of around $1.4 trillion keeps it far ahead of any rival carmaker.
The SpaceX question
Beyond the numbers, investors are focused on a possible blockbuster combination. SpaceX, which listed on the stock market this summer, and Tesla have each formed special committees of independent directors to study whether the two companies should merge. Media reports citing people close to the talks have put the potential value at about $3.5 trillion.
Elon Musk, who leads both firms, said on Tuesday that he thinks a merger “would be a good idea” but that the decision rests with the committees. He has described himself as a conflicted party and said he cannot take part in their discussions. Some analysts warn that his public comments could complicate or slow the review, and governance specialists expect close scrutiny from shareholders.
Nothing has been agreed, and no terms have been set. One prominent Tesla bull has put the odds of a deal by the end of next year at 80 percent, but that is one analyst’s opinion, not a company statement.
Meta lifts the mood
Meta, which also reported after the close, beat revenue forecasts with sales of $64.6 billion, up 26 percent. Its shares rose about 2 percent in after-hours trading even as it nudged up the low end of its capital spending plan to between $135 billion and $145 billion. Together with Tesla, it is one of the first of the big technology companies to show whether heavy AI investment is paying off.
What to watch
Thursday’s session will deliver the first verdict on both reports, and Tesla’s stock reaction in particular will show how much weight investors place on the merger story relative to profit. Further ahead, the Federal Reserve meets on October 28, and traders are already pricing a possible rate rise in December.
For now, earnings are doing the heavy lifting. Whether they can keep offsetting expensive oil and costly borrowing is the question that will define the rest of the quarter.
