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Mixed US Market Performance: Tesla Beats Expectations, Netflix Sees Subscriber Jump

US stocks exhibit a mixed response in the wake of Netflix and Tesla’s earnings reports.

New York Stock Exchange
New York Stock Exchange

Tesla’s Unexpected Profit Beating Met with Market Dip

US stocks presented a mixed landscape on Thursday, as major players Tesla, Inc. (NASDAQ: TSLA) and Netflix, Inc. (NASDAQ: NFLX) released their earnings reports. As of 10:59 ET (14:59 GMT), the Dow Jones Industrial Average showed a 0.7% increase with a rise of 259 points. In contrast, the S&P 500 dipped by 0.3%, and the NASDAQ Composite saw a 1.3% decrease.

Tesla shares took a surprising turn, dropping 7.3% despite outperforming profit forecasts. The electric vehicle giant hinted at a potential slowdown in Q3 production, attributed to factory upgrades. Additionally, Tesla indicated potential price cuts in a bid to enhance demand in the face of growing competition, a move that could lead to tighter profit margins.

Netflix Earnings Report: Subscription Surge but Revenue Misses Mark

Meanwhile, streaming behemoth Netflix reported a significant rise in subscribers for the second quarter following a crackdown on password sharing. Despite this growth, Netflix fell short of revenue expectations, causing an 8.7% drop in shares.

In the pharmaceutical sector, Johnson & Johnson (NYSE: JNJ) enjoyed a 6.1% rise in its shares after exceeding revenue and profit expectations and projecting a positive outlook for the year.

Tech Sector Fuels NASDAQ Surge Amid Anticipation of Federal Reserve Decision

The tech sector's remarkable surge this year has driven the Nasdaq up by 37% since January. This rise is largely linked to the anticipation that the Federal Reserve may soon end its streak of interest rate increases. However, another quarter-point increase is still expected from the central bank next week. The Dow, too, continues to enjoy success, registering its longest winning run on Wednesday in nearly four years.

Investors Await Fed Meeting with Economic Data Signaling Cooling Economy

As investors keep a keen eye on the Fed's forthcoming meeting, there's mixed speculation on whether there will be further rate hikes this year following July's decision. According to CME’s FedWatch Tool, the probability of an additional quarter-point hike in November sits around 30%.

Economic data also suggests a cooling economy, even as the labor market remains tense. Last week's new jobless claims were lower than expected at 228,000. However, existing home sales showed a drop of 3.3% from the previous month, landing at 4.16 million annualized, slightly below the anticipated 4.2 million.