A close-up of the Tesla Motors logo against a bright blue sky on July 23, 2018 in Pleasanton, California.
Smith Collection | Gad | Getty Images
This report is from today’s international market newsletter CNBC Daily Open. The CNBC Daily Open provides investors with everything they need to know, no matter where they are. Is it what you see? You can subscribe here.
What you need to know today
S&P ends losing streak
U.S. markets were mixed on Thursday. Supported by Tesla, the S&P 500 and Nasdaq Composite rose, but the Dow Jones Industrial Average fell. The pan-European Stoxx600 index rose 0.03%. Shares in British bank Barclays rose 4.2% after the bank reported better-than-expected third-quarter profits, briefly hitting a nine-year high during trading hours.
Best day for Tesla stock in 11 years
Tesla stock rose 21.9%, its best day since 2013. Investors welcomed CEO Elon Musk’s prediction of 20% to 30% “automotive growth” in 2025, higher than the 15% expected by analysts surveyed by FactSet. But analysts at Deutsche Bank and Morgan Stanley have doubts about whether that lofty goal can be achieved.
Capri is not woven into the tapestry
An $8.5 billion deal proposed by Coach owner Tapestry to buy Michael Kors owner Capri was blocked by a U.S. federal judge on Thursday. Tapestry’s stock price soared 13.7% in extended trading on the news, while Capri’s stock plunged 45.1%. The Federal Trade Commission filed a lawsuit in April seeking to block the deal, saying it would harm consumers.
Oppo’s AI ambitions
Chinese smartphone maker Oppo has weekly discussions with Google and Microsoft about artificial intelligence, Billy Zhang, Oppo’s president of overseas markets, sales and services, told reporters last week. Oppo is working with both companies to build its next big AI app in preparation for the launch of its flagship phone.
(PRO) S&P 5% Pullback Possible
Earlier this week, the S&P 500 fell for three consecutive days for the first time since early September. Although the index rebounded on Thursday, BTIG believes headwinds could cause the S&P index to fall 5% to 5,500 in the coming weeks.
conclusion
For the most part, markets are irrational creatures. As John Maynard Keynes said, they are driven by “animal spirits” that cannot be tamed.
For example, the effect of a meridional sunspot on the moonrise can cast a shadow on the S&P and cause a decline in stock prices.
Yes, this is a satire on how the market works. But it shows how they sometimes act without any concrete causal relationship.
But Thursday’s market made sense.
Tesla’s stock price soared 21.9% after its earnings per share managed to beat Wall Street expectations and Mr. Musk predicted higher-than-expected auto growth in 2025.
The S&P managed to recover from a three-day losing streak, rising 0.21% on the back of a surge in Tesla, the index’s best-performing stock. The Nasdaq, which is heavy on tech companies, rose 0.76%, outpacing the S&P.
Unlike the other two indexes, Tesla is not a component of the 30-stock index, which caused the Dow Jones Industrial Average to drop 0.33%. Boeing shares, which fell after an extended employee strike, and IBM shares, which slumped due to the company’s poor profits, also weighed on the Dow Jones Industrial Average.
Of course, these are oversimplifications. There was another reason behind yesterday’s market movement. But the fact that we can draw lines connecting cause and effect, even if vague, suggests that investors are scrutinizing performance and news during uncertain times due to the US election.
The good news is that some uncertainty will leave the market after the election, and “some certainty will replace it about the path forward,” said Andy Sieg, head of global wealth at Citi. And “most likely a relief rally will occur.”
The bad news is that, as the word “bailout” suggests, markets may once again be highly emotional.
—CNBC’s Sarah Ming, Pia Xin and Lisa Kai-Lai Han contributed to this report.
