LIVE STOCK MARKET UPDATES: Morgan Stanley, Ally Financial, Citizens, and other banks report earnings
A speech from the NY Fed's John Williams, IBM, and Tesla earnings. More on the ongoing banking crisis and looming recession. FOX Business is providing real-time updates on the markets, commodities and all the most active stocks on the move.
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Tesla Inc missed market estimates for first-quarter margin on Wednesday, throttled by a series of aggressive price cuts meant to spur demand in a sagging economy and fend off rising competition.
Elon Musk-led Tesla reported total gross margin of 19.3%, compared with expectations of 22.4%, according to 14 analysts polled by Refinitiv. This was the lowest since the fourth quarter of 2020.
For the first quarter, Tesla's automotive gross margins, a closely watched figure by analysts and investors, dropped. Analysts had expected Tesla to report auto gross margin of 23.2% for the quarter, according to 17 analysts polled by Visible Alpha, down from a record 32.9% a year earlier and the lowest since the fourth quarter of 2019.
Shares of the Austin, Texas-based automaker were down 3.2% in after-hours trading.
The S&P 500 ended little changed on Wednesday as investors digested a mixed bag of corporate earnings, including upbeat reports from medical technology companies, countered by weakness in Netflix shares.
The Dow slipped, weighed down by declines in Walt Disney Co and UnitedHealth Group Inc shares following results from rivals in their respective industries.
Major equity indexes have been largely stable during the early stages of a first-quarter earnings season that investors expect to show tepid results.
Investors are looking for signs in corporate results that inflation may be driving up costs or hurting consumer spending, amid fears the economy may be on the cusp of a downturn.
Investor pessimism surged to the highest level in five months in April as turmoil within the banking system threatens to ignite a credit crunch for U.S. consumers and businesses, according to Bank of America's global fund manager survey.
Fund managers indicated that worries over tighter credit conditions had driven up bond allocation to a net 10% overweight, the highest since March 2009. In total, nearly two-thirds of investors expect a weaker economy in the next 12 months, the highest since December and reversing four months of improvement.
About 35% of participants in the survey identified the bank credit crunch and a global recession as the top risk to markets. That compares to about 34% who highlighted sticky inflation that keeps central banks on a hawkish trajectory as the biggest threat.
Another 16% see a systemic credit event as the biggest risk, while just 11% are worried about geopolitics – such as the war in Ukraine or tensions between China and Taiwan – worsening.
A Southern California startup is working to create a new overnight passenger train service that would link Los Angeles and San Francisco.
Dreamstar Lines Inc. calls the experience a "premium overnight ‘hotel train’ passenger train service," saying passengers will be able to board trains in a city center or suburban station, fall asleep in a private room and wake up at their destination.
"A ‘short haul’ flight is anything but – when you consider the time lost to check-in, security, and travel to and from remote airports," it said on its website. "On a deluxe sleeper train, you spend fewer waking hours traveling than you would flying... and you don't arrive feeling like you've already had a full day's work."
A key measure of home-purchase applications fell sharply last week as consumer demand cooled in the face of higher mortgage rates.
The Mortgage Bankers Association’s index of mortgage applications tumbled 8.8% last week for the first time in months, according to new data published on Wednesday.
Demand for refinancing also continued to plunge last week, tumbling another 6%, according to the survey. Compared with the same time last year, refinance applications are down a stunning 56%.
United Airlines Holdings Inc on Tuesday forecast a profit for the second quarter and retained its earnings outlook for the full year on "strong" travel demand, particularly for international trips.
In a statement, CEO Scott Kirby said bookings for international travel are growing at twice the domestic rate.
The Chicago-based carrier's earnings came days after rival Delta Air Lines played down risks of a slowdown in travel spending, citing record bookings.
United said it expects an adjusted profit of $3.50-$4 a share in the second quarter, with a 14%-16% year-on-year jump in revenue. The earnings forecast compares with analysts' estimates of $3.65 a share, according to a Refinitiv survey.
The European Union agreed a 43-billion-euro ($47 billion) chip subsidies plan on Tuesday but the relatively modest budget, lack of a domestic market for cutting-edge chips and red tape could hamper efforts to catch up with the United States and Asia.
The size of subsidies under the EU Chips Act, which aims to tempt the world's top chipmakers to build factories in the bloc and double its share of global output to 20% by 2030, lags the $52 billion CHIPS for America Act.
The legislation is aimed at ensuring the region has supplies of critical components after COVID-19 lockdowns caused major shortages that hurt output of everything from mobile phones to cars and refrigerators.
Baker Hughes Co on Wednesday said it beat first-quarter profit estimates as rising oil prices boosted demand for its equipment and services, sending the oilfield firm's shares higher.
Oil markets have been choppy, falling last month on concerns of a banking crisis and economic jitters before rebounding on a surprise production cut by OPEC+ members and strong demand in China.
"We remain optimistic on the outlook for energy services," despite the oil price volatility, Baker Hughes CEO Lorenzo Simonelli said.
Spending on oil and gas is becoming "less sensitive to commodity price swings," he added, pointing to factors such as the development of liquefied natural gas (LNG) projects.
U.S. stocks fell at the open on Wednesday as Treasury yields rose on expectations that the Federal Reserve could keep interest rates higher for longer, while mixed earnings from regional banks and weakness in Tesla further dented sentiment.
The Dow Jones Industrial Average fell 86.80 points, or 0.26%, at the open to 33,889.83. The S&P 500 opened lower by 15.54 points, or 0.37%, at 4,139.33, while the Nasdaq Composite dropped 89.73 points, or 0.74%, to 12,063.68 at the opening bell.
Tesla Inc has cut prices for some of its Model Y and Model 3 vehicles in the U.S., the sixth time the company has made such a move this year as it looks to spur demand even at the cost of its industry-leading profit margins.
The cuts came ahead of the electric-vehicle maker's first-quarter earnings due on Wednesday. Shares have risen just a little under 50% this year, after posting their biggest annual drop in 2022.Tesla's website showed late on Tuesday that it cut prices of its Model Y 'long range' and 'performance' vehicles by $3000 each and of its Model 3 'rear-wheel drive' by $2,000 to $39,990.
The company cut U.S. prices of its base Model 3 by 11% so far this year and that of its base Model Y by 20% – moves that come as the United S
Morgan Stanley's first-quarter profit beat expectations as rising revenue from its wealth management division offset declines in its investment banking and trading units. Shares, however, fell more than 2% in premarket trading.
Revenue from investment banking fell 24% to $1.25 billion, while the wealth management unit saw a 11% jump, bringing in $110 billion in net new assets.
Wall Street's investment banks have suffered the most from a downturn in mergers and acquisitions as investors shunned risky bets against the backdrop of volatile markets and rapidly rising interest rates.
The turmoil has also brought initial public offerings to a virtual halt as startups put off market debuts until investor sentiment improves.
Citizens Financial Group Inc reported a first-quarter profit on Wednesday that missed Wall Street estimates as the lender recorded a drop in deposits and set aside more rainy-day funds to cover for loans, amid fears of a looming recession.
The bank's shares, which have lost nearly 23% so far this year, fell about 1.5% to $30 in premarket trading.
Regional lenders have been roiled in recent weeks after bank runs at two mid-sized rivals battered confidence in the stability of the banking industry and reverberated through global markets.
The banking crisis also shook people's faith in the health of the economy and added to worries of an upcoming recession, prompting Citizens Financial to set aside $168 million in case its customers fall behind on their loan payments, compared with $3 million a year earlier.
Ally Financial Inc. on Wednesday reported first-quarter profit of $319 million.
The Detroit-based company said it had profit of 96 cents per share. Earnings, adjusted for non-recurring gains, came to 82 cents per share.The results missed Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 88 cents per share.
The auto finance company and bank posted revenue of $2.1 billion in the period, topping Street forecasts. Six analysts surveyed by Zacks expected $2.05 billion
.Ally Financial shares have risen almost 10% since the beginning of the year. The stock has declined 39% in the last 12 months.
Netflix Inc beat Wall Street earnings estimates for the first quarter but offered a lighter-than-expected forecast on Tuesday, demonstrating the challenges the mature streaming service faces in its pursuit of growth.
The company said it shifted a wider launch of a plan to crack down on unsanctioned password sharing into the second quarter to make improvements, delaying some financial benefits, but said it was pleased with results so far.
As the streaming video pioneer faces signs of market saturation, it is looking to new ways to make money, such as the password crackdown and a new ad-supported service.
Revenue and earnings for the first quarter came in roughly in line with the average analyst estimates from Refinitiv. Earnings per share hit $2.88 with revenue of $8.162 billion.
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