US open: Stocks little changed ahead of busy earnings week

21st Oct 2024 12:29

(Sharecast News) - US stocks were little changed in early trade on Monday as investors eyed a week jam-packed with high-profile earnings results.

At 1455 BST, the Dow Jones Industrial Average was down 0.1%, while the S&P 500 was flat and the Nasdaq was 0.1% firmer.

Kathleen Brooks, research director at XTB, said Tesla's third-quarter earnings, due on Wednesday, will be "the tech focus of the week".

"The company is expected to report revenues of $25.41bn, and profits of $2.06bn. Tesla is a volatile stock at the best of times, but it is especially volatile during earnings season," she said.

"The 12-month forward P/E ratio is already a whopping 79.88 x forward earnings, so we enter earnings season with Tesla already looking expensive. The stock price is also higher by 48% in the past six months, although it has sold off by more than 4% in the last 4 weeks.

"A Tesla earnings report is always more than the figures. Elon Musk is selling a story, and the market will be looking to see if he can deliver in Q3. We expect more detail on the cybercab, that was unveiled earlier this month, along with its latest robots. The initial launch did not go down well with investors, which has led to some speculation that new features for the cybercab will be included in this earnings call, including a steering wheel and actual brakes.

"Investors will also be looking for an update on the launch of the latest $30,000 model. Car sales gross margins could pick up sharply, as Tesla manages to wrestle back pricing power after a slump in EV demand earlier this year. Energy storage is also a big money maker for Tesla, and there could be decent earnings growth in this segment.

"Overall, if Musk can turn around the Tesla story and post better earnings in Q3 compared to Q2, then it may spur a mini recovery in the stock price."

Quarterly numbers are also due this week from Coca-Cola, Boeing, General Motors, T-Mobile and IBM, among others.

In corporate news, Kenvue surged following a report that activist investor Starboard Value has taken a large stake in the company, which was spun out of Johnson & Johnson in 2023. Kenvue owns brands such a Listerine and Tylenol.

Boeing gained as it reached a new contract proposal with its machinists' union that could end a more than month-long strike.

Glasses manufacturer Warby Parker was boosted by an upgrade to 'buy' from 'neutral' at Goldman Sachs.

Health insurance firms Cigna Group and Humana were in focus after Bloomberg reported on Friday that Cigna had revived efforts to merge with its smaller rival after talks fell apart late last year.

Bloomberg cited sources as saying that the two have held informal discussions recently about a potential deal.