The Tesla Inc. Model Y electric vehicle during the launch in Kuala Lumpur, Malaysia, July 20, 2023.
Samsul Said | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Tesla misses on earnings
Tesla reported third-quarter results that missed expectations on both earnings and revenue for the first time since the second quarter of 2019. The electric vehicle maker reported adjusted earnings of 66 cents per share vs. 73 cents per share expected and revenue of $23.35 billion per share vs. $24.1 billion expected. Tesla’s total operating margin also came in significantly lower at 7.6%, from the year-ago quarter’s 17.2%.
Netflix profit tops expectations
Netflix’s password-sharing crackdown and its new ad-supported tier boosted subscriber growth in the third quarter. The streaming giant added 8.76 million global subscribers during the quarter, higher than expectations of 5.49 million and the most it’s added since the second quarter of 2020 – when Covid restrictions kept people at home. Its earnings came in at $3.73 per share, better than the $3.49 per share expected.
iPhone 15 sales off to a slow start in China
A month after Apple’s iPhone 15 came out, analysts and investors are starting to see signs of slow demand in China versus last year. Sales of iPhone 15 models are down 4.5% for the first 17 days in Apple’s third largest market compared to last year, according to an estimate from Counterpoint Research.
[PRO] JPMorgan warns of rate cut impact on stocks
JPMorgan Asset Management says cut in interest rates by the Federal Reserve next year would likely be bad news for U.S. equity investors. Stocks have typically rallied on multiple occasions over the past two years on any dovish signal from central bankers but JPMorgan believes Fed cuts in 2024 would likely coincide with declining corporate earnings, creating headwinds for stocks. Find out here where to invest.
The bottom line
U.S. stock markets closed out Wednesday with sweeping declines. The yield on the benchmark 10-year Treasury hit 4.908%, rising above 4.9% for the first time since 2007 as investors scoured economic data for clues on the Federal Reserve’s interest rate trajectory.
Housing starts rose in September, but at a slower-than-expected rate, according to data released Wednesday. Building permits fell last month, but less than economists anticipated. This arrives a day after consumers showed surprising strength in September, boosting retail sales well above expectations.
Traders are still expecting an over 85% chance that the Fed will hold its rates steady when it announces its next monetary decision on Nov. 1, but the retail sales figure has given way to some bets of another hike in December.
Markets seemingly have no dearth of catalysts this week as earnings season gathers steam. Tesla missed third-quarter expectations on both profit and revenue. Netflix’s password-sharing crackdown efforts along with interest in its new ad-supported tier set its quarter up for success.
Netflix’s results also showed that the streaming giant is back on track. Just in April 2022, it had reported a loss of 200,000 subscribers. Turns out, a cheaper advertising tier — a product Netflix hoped would appeal to those who had shared passwords — helped the company add more subscribers. Of course, not as much as it did during the throes of the Covid-19 lockdowns but a step in the right direction.
More lies ahead for investors who will focus on Federal Reserve Chair Jerome Powell’s speech at noon ET. “Powell is always tacking back to whatever helps feed the narrative that they need to stay vigilant, and for understandable reasons,” said Luke Tilley, chief economist at Wilmington Trust.
He is expected to assure markets the central bank is committed to its fight against inflation, but maybe this time with a little less force.