Stan Choe
The US stock market is ticking higher as strong profit reports from SpaceX, Capital One Financial and other big companies offset updates from Netflix and AT&T that investors found disappointing.
The S&P 500 rose 0.6 per cent and was on track for a third straight modest gain. The Dow Jones Industrial Average was up 205 points, or 0.4 per cent, in early afternoon trade and the Nasdaq composite was 1.2 per cent higher.
Futures are pointing to a flat start for the Australian sharemarket. The ASX added 0.2 per cent on Wednesday. The Australian dollar is stronger at US70.32¢ at 5.25am AEDT.
SpaceX helped lead the market and climbed 10.1 per cent after reporting a stronger profit for the summer than analysts expected. Elon Musk, who runs the company that makes money from artificial-intelligence technology, rockets and other businesses, also said that SpaceX took a step to consider a possible merger with Tesla, his electric-vehicle company.
Tesla, which will report its latest quarterly results after the closing bell, rose 3.6 per cent and was one of the strongest forces lifting the S&P 500.
Meanwhile, a judge has ordered Meta to pay New Mexico $US25 billion ($36 billion) after a jury found the company liable for deceiving users about privacy and content moderation policies on Facebook.
Judge Francis Mathew handed down the amount. The state had sought $US35 billion to $US40 billion. Jurors in September found Meta liable for over 43 million violations of New Mexico consumer protection laws when a political consulting firm, Cambridge Analytica, harvested Facebook user data to generate targeted political ads for the 2016 election. Meta will release its results after the closing bell.
Other stocks rallying on profit reports that topped analysts’ expectations included Capital One Financial, which rose 3.7 per cent, and Winnebago Industries, which climbed 9 per cent.
Expectations are high for profit growth during the summer, and companies will need to meet them to justify the big runs their stock prices have made toward records despite worries about high inflation, higher interest rates and other challenges weighing on Wall Street.
Winnebago was able to report a more resilient profit than analysts expected even as high fuel prices and frustration among US shoppers restrain interest in recreational vehicles, for example. CEO Michael Happe said its more expensive towable RVs are a tougher sell, but customers are interested in its “more accessible” offerings.
On the losing side of Wall Street was Netflix, which fell 5.2 per cent even though the streaming service reported a stronger profit than analysts expected. Investors focused instead on worries that Netflix’s momentum may be slowing. The company’s forecast for revenue growth in the final three months of the year fell short of analysts’ expectations.
AT&T fell 6.5 per cent even though it likewise delivered a stronger profit for the latest quarter than analysts expected. It gave a forecast for growth this year in an underlying measure of earnings before income taxes and some other things that fell short of some analysts’ expectations.
Among AI stocks, which have been at the centre of the market’s action in recent weeks, the movements remained unsettled.
After leading the rest of the market for years because of the frenzy around AI, stocks in the industry have become shaky on worries that the build out of data centres may slow because of how much more expensive it’s become to borrow money.
CoreWeave, which has borrowed money to buy AI chips that it rents out to customers over the cloud, has been particularly volatile. It bounced between an early gain of nearly 4 per cent and a drop of 4.5 per cent Wednesday morning before moderating to a dip of 1.1 per cent. A day earlier, it had careened between similarly wide gains and losses.
Other AI-linked stocks were more resilient. Nvidia’s rise of 1.8 per cent was the strongest force lifting the S&P 500.
Besides SpaceX’s profit report showing strength for AI spending, another encouraging signal for the industry came from Super Micro Computer, which sells AI servers and services. It said it expects to report stronger revenue for the summer than it had earlier forecast because of “increased demand for AI platforms,” and its stock rallied 9.3 per cent.
Another potential boost for the AI industry came from an easing of Treasury yields, which help dictate how expensive loans are for the US government, companies and regular Americans.
The yield on the 10-year Treasury fell to 5.10 per cent from 5.12 per cent late Tuesday, though it remains far above its 3.97 per cent level from before the war with Iran sent oil prices and worries about inflation higher.
Oil prices remained unsteady on Wednesday following big recent swings on uncertainty about when the energy industry can return to normal. The price for a barrel of Brent crude added 0.1 per cent to $US108.95 after flipping up and down through the morning. It’s been yo-yoing between $US97 and $US112 in October.
In stock markets abroad, indexes rose in Europe following a mixed finish in Asia. South Korea’s Kospi jumped 3.3 per cent for one of the world’s biggest moves as AI stocks regained strength.
AP
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