Nasdaq rose after Tesla posted strong gains

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 30, 2022. REUTERS/Brendan McDermid/File photo

July 21 (Reuters) – The Nasdaq rose on Thursday, buoyed by earnings at electric carmaker Tesla in its better-than-expected quarterly results, which helped offset a drop in telecom and energy shares.

The S&P 500 rose 0.6% after an earlier drop, and the Dow Jones Industrial Average was flat in early afternoon.

Tesla (TSLA.O) rose 10.1%, while AT&T Inc. (TENNESSEE) tumbled to send telecom shares lower after the wireless carrier cut its cash flow forecast saying some subscribers were delaying bill payments. Energy stocks fell on weak crude prices. read more

Tesla’s earnings benefited from a rise in the price of its cars, offsetting production challenges. Strong reports from the automaker and streaming giant Netflix Inc. (NFLX.O) they have buoyed mega-cap growth stocks that have come under pressure from rising interest rates.

“The earnings picture has been maybe a little better than investors feared,” said J. Bryant Evans, investment adviser and portfolio manager at Cozad Asset Management. “Investors are thinking that … especially the tech (the sector) is down too low, and maybe there are some valuation opportunities there.”

Seven of the 11 major S&P 500 sectors are in positive territory, with consumer discretion (.SPLRCD)health care (.SPXHC) and information technology(.SPLRCT) posting the biggest gains adding over 1% each.

Falling oil prices hit the energy sector of the S&P 500 (.SPNY)which lost 2.8% to lead the declines.

All eyes are on next week’s Federal Reserve meeting, where policymakers are expected to raise interest rates by 75 basis points.

Rising inflation also prompted the European Central Bank to belatedly join its global peers in a rate hike cycle with an aggressive 50 basis point hike. read more

The Fed’s rate decision next week will be followed by crucial second quarter US gross domestic product data, which is likely to be negative again.

Under a general rule of thumb, two quarters of negative GDP growth would mean the United States is in a recession. read more

In the latest signs that the US economy is slowing, the number of Americans signing up for jobless benefits rose to the highest level in eight months and a closely watched gauge of factory activity tumbled this month. read more

“Consumers are just beginning to react to the lesser amount of money in their pockets, whether it’s due to a shrinking overall job market or rising interest rates and inflation,” Evans added.

“Some of the strong earnings reflect past consumer strength, while much of this broader decline that we’ve seen … in recent months has come at the price of a slowdown in the broader economy that would eventually hit consumers.” “.

At 2:24 p.m. ET, the Dow Jones Industrial Average (.DJI) rose 25.94 points, or 0.08%, to 31,900.78, the S&P 500 (.SPX) 24.59 points, or 0.62% gained, at 3,984.49 and the Nasdaq Composite (.IXIC) it added 127.19 points, or 1.07%, to 12,024.84.

Advancing issues outnumbered declining issues on the New York Stock Exchange by a ratio of 1.15 to 1; on Nasdaq, a ratio of 1.20 to 1 favored advancers.

The S&P 500 recorded 1 new 52-week high and 29 new lows; the Nasdaq Composite recorded 17 new highs and 38 new lows.

Reporting from Echo Wang in New York; Additional reporting by Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Edited by Arun Koyyur and Aurora Ellis

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