US stock futures rise after Tesla reports blow-out earnings and investors await further clues from Fed Chair Powell
- US stocks looked set to open higher Thursday after Tesla crushed Q1 earnings by beating Wall Street estimates.
- The EV maker's record results should reasonably ease tech jitters, an analyst said.
US stock futures rose Thursday after Tesla brought some optimism back to the market by revealing a record profit, and investors awaited clues on central-bank thinking from Federal Reserve Chair Jerome Powell's speech.
Futures on the Dow Jones were up 0.5% as of 5:15 a.m. ET. Futures on the S&P 500 rose 0.7%, and Nasdaq futures gained 1.1%, suggesting a higher start to trading later in the day.
Tesla rose 7% in premarket trading after the electric-vehicle maker posted first-quarter earnings for 2022 late Wednesday. It beat analyst expectations by reporting higher margins, and its quarterly revenue rose 80% year-on-year to $18.7 billion.
The company "defied skeptics as rising prices offset cost pressure to drive stronger-than-expected earnings," Ben Laidler, global markets strategist at eToro, said. "This will refocus attention on the accelerating global EV transition, after the recent distractions of founder Elon Musk's bid for Twitter."
After Netflix shocked the market by losing a huge 200,000 subscribers, the tech-heavy Nasdaq turned lower Wednesday. But Tesla's results should offset a reasonable chunk of tech jitters, according to Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
More quarterly results are expected as earnings season continues, with Snap, NextEra Energy, Blackstone, and American Airlines due to report later Thursday.
The yield on the 10-year Treasury note rose slightly to 2.87%, after Wednesday's decline on speculation that US inflation is close to peaking.
As global growth forecasts are being cut at the same time as interest rates are being hiked, investors are anticipating recessions.
San Francisco Fed President Mary Daly on Wednesday expressed a desire to get policy rates to neutral, and said a series of rate hikes in the coming months might just lead to a shallow recession.
Investors will be watching for Powell's speech at 11 a.m. ET. He's already said the Fed is ready to raise interest rates by 50 basis points at its May 3-4 meeting.
Powell is scheduled to speak again at 1 p.m. ET, at an event hosted by the International Monetary Fund alongside European Central Bank President Christine Lagarde. Bank of England Governor Andrew Bailey will speak at the Peterson Institute for International Economics.
Markets are expected to closely observe the central bank "trinity" for indications of coming monetary policy, given the current elevated macroeconomic and geopolitical risks.
Ukraine's crisis and continued uncertainty around the geopolitical backdrop will keep a ceiling on how far Western markets can climb over coming weeks and months, Lund-Yates said.
In Europe, London's FTSE 100 was down 0.2%. The pan-continental Euro Stoxx 600 rose 0.3%, and Frankfurt's DAX gained 1%.
Asian equities traded mixed, with mainland China and Hong Kong stocks lagging on worries about the Chinese economy's battle with coronavirus. Chinese President Xi Jinping's speech failed to boost investor sentiment.
"President Xi put more emphasis on fighting COVID than stimulating the economy, which showed clear signs of slowing down in March and April," Per Hammarlund, SEB Research's chief EM Strategist, said.
The Shanghai Composite fell 2.3%, and Hong Kong's Hang Seng closed 1.3% lower. Tokyo's Nikkei rose 1.2%.
Oil prices were fluctuating around $108 a barrel after data showed an unexpected decline of 8 million barrels in US crude inventories in the week ending April 15. A tug-of-war between concerns over demand and supply lifted prices Thursday.
Brent crude futures were up 1.2% at $108.05 a barrel, and West Texas Intermediate futures rose 1% to $103.21 a barrel.
"The market is anything but calm, with supply disruptions from Libya and Russia currently being offset by lower demand in China, where officials are struggling to eradicate a wave of COVID-19 in key cities," Ole Hansen, Saxo Bank's head of commodity strategy, said.