US stocks climb as earnings season kicks into high gear

US stocks climbed on Tuesday, on track for further gains as tech-focused investors prepared for a fresh wave of earnings highlighted by struggling Tesla (TSLA).

The S&P 500 (^GSPC) rose about 0.5% after staging a comeback from a six-day run of losses the previous session. The Dow Jones Industrial Average (^DJI) inched up roughly 0.4%, while contracts on the tech-heavy Nasdaq Composite (^IXIC) also stepped up 0.4%.

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The gauges are looking to build on a positive start to the week that saw the S&P 500 close below 5,000 for the first time since February. Stocks rebounded as investors jumped back into the likes of AI darling Nvidia (NVDA), which had lost ground amid worries about higher-for-longer interest rates.

Many in the market are looking to this week’s rush of Big Tech earnings to pull stocks out of the slump that has dogged them since the start of the year — though some on Wall Street hold out less hope.

Tesla’s earnings are likely to be a catalyst for the S&P 500, given the stock’s weight in the index. The results, due after the market close, are seen as pivotal for Elon Musk’s EV maker, whose shares have been hit hard by a disappointing delivery outlook, the cancellation of plans for a long-awaited sub-$30,000 model, and a strategy switch to robotaxis, among other headwinds.

As the first “Magnificent Seven” to report, Tesla sets the stage for highly anticipated results from Meta (META), Microsoft (MSFT), and Alphabet (GOOG) later in the week, though some suspect the megacaps’ momentum is fading.

Meanwhile, legacy automaker GM (GM) got the ball rolling on earnings on Tuesday, posting strong first quarter results and upping its full-year guidance. Its shares popped around 5%. Spotify (SPOT) stock jumped after the audio streamer swung to a profit amid an earnings beat.

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Tue, April 23, 2024 at 8:22 AM MDT

US has ‘structural shortage’ of millions of homes, PulteGroup CEO says

Homebuilder PulteGroup (PHM) said Tuesday that a chronic housing shortage in the US presents the company with an opportunity to grow its market share.

“After more than a decade of underbuilding, it is estimated that our country has a structural shortage of several million homes,” PulteGroup CEO Ryan Marshall said in a press release. “Our strong financial performance reflects both favorable demand conditions and our balanced operating model that allows us to more effectively meet the individual needs of first-time, move-up and active-adult consumers.”

The comments came as it reported first quarter results that beat Wall Street estimates, sending its stock up as much as 4%.

PHM reported first-quarter earnings per share of $3.10 a share on revenue of $3.95 billion. Wall Street analysts had expected EPS of $2.36 a share on revenue of $3.58 billion.

Homebuilders like Pulte have been able to manage the high interest rate environment by offering incentives to buyers. The average rate on a 30-year fixed loan topped 7% last week, according to Freddie Mac.

Marshall went on to say on the company’s first-quarter earnings call that home prices will likely continue to rise due to limited inventory.

“Our company’s ability to offer targeted incentives, particularly mortgage rate buydowns, is a powerful tool that can help bridge the affordability gap,” he said.

He added that in the first quarter “approximately 25% of our homebuyers used our national rate program. In a world where the consensus is that interest rates will be higher for longer, our rate incentives likely become an even greater competitive advantage, especially relative to the existing home seller.”
Tue, April 23, 2024 at 7:32 AM MDT

Stocks open higher ahead of key earnings

US stocks opened higher on Tuesday ahead of a slew of key earnings reports.

The S&P 500 (^GSPC) rose about 0.5% after staging a comeback from a six-day run of losses the previous session. The Dow Jones Industrial Average (^DJI) inched up roughly 0.4%, while contracts on the tech-heavy Nasdaq Composite (^IXIC) also stepped up 0.4%.
Tue, April 23, 2024 at 7:18 AM MDT

The IPO outlook headed in the right direction

There may be concern about what the Fed does or doesn’t do on rates this year, but private companies are still leaning toward coming to public markets this year.

That’s according to new IPO research on Tuesday by Edelman Smithfield, shared exclusively with Yahoo Finance. According to the survey, about 89% of investors expect to see resumed activity in the US IPO market from April to December 2024. Roughly 91% of investors are about the same or more likely to invest in future IPOs.

Edelman Smithfield surveyed 106 full-time US chief investment officers, portfolio managers, and buy-side analysts. At least 50% of those surveyed work for investment firms with assets under management of $50 billion or more.

I found the graphic below from the slide deck particularly interesting. It shows how prospective investors are thinking about investing in IPOs in 2024. Take note of the balanced focus on key metrics — in other words, investors in this backdrop want to see more than just a pathway to profits.

Investors want to see a lot from potential public companies in 2024. (Edelman Smithfield)
Tue, April 23, 2024 at 5:09 AM MDT

Quick take on GM’s earnings blowout

GM’s (GM) stock is popping by almost 5% after the company’s big earnings beat (which continues to occur because the company has been an aggressive repurchaser of its stock in recent quarters and analysts aren’t modeling it correctly) and full-year guidance lift.

After an initial pass through the earnings deck, it’s clear GM is just a different investing story than embattled Tesla (TSLA) right now. GM is cutting costs. GM is finding success with its new EVs. GM is buying back a ton of stock.

Tesla is cutting prices and pondering robotaxis.

Yep.

I chatted with GM’s CFO Paul Jacobson this morning — he struck an upbeat tone on the company’s product pricing and EV demand. Yahoo Finance’s Pras Subramanian has everything you need to know about the earnings report here.

Before you go, below is an inside look into what GM and CEO Mary Barra are up to:
Tue, April 23, 2024 at 4:17 AM MDT

First take on PepsiCo earnings

PepsiCo (PEP) is seeing an interesting reaction to its earnings report this morning.

While it’s great to see PepsiCo maintain its sales and profit outlook for 2024, the stock may be bidding down on the quarterly volume declines at the Frito Lay North America and North America Beverage business. The company did note that volume trends improved sequentially, but the year-on-year declines suggest shoppers are still pushing back on price increases.

PepsiCo chairman and CEO Ramon Laguarta tells me he thinks volumes will continue to gain ground in coming quarters. He also doesn’t expect industry promotions to pick up as one way to lower prices for shoppers.