Wall Street Eyes Higher Open After Strong GDP Data; Tesla Slides On Growth Warning

Wall Street’s main indexes were poised for a higher open, as a strong economic growth print boosted hopes of a likely soft landing, while Tesla sank on warning of slower growth.

An advance estimate showed fourth-quarter gross domestic product (GDP) rose at a 3.3% annualized rate, much higher than the 2% rate expected by economists polled by Reuters.

“The stronger-than-expected GDP sort of increases the chance of perhaps a soft landing,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“It just seals fact that the Fed is likely not going to be cutting rates anytime within the next six months.”

Another set showed initial jobless claims for the week ended Jan. 20 rose to 214,000, higher than the estimated 200,000 figure.

At 8:47 a.m. ET, Dow e-minis were up 72 points, or 0.19%, S&P 500 e-minis were up 16.25 points, or 0.33%, and Nasdaq 100 e-minis were up 77.25 points, or 0.44%.

However, Tesla (TSLA.O), opens new tab looked set to curb the euphoria in the market after its shares lost 8.8% in premarket trading on warning that sales growth may slow sharply this year.

EV makers Rivian Automotive (RIVN.O), opens new tab and Lucid Group (LCID.O), opens new tab also fell 2.2% and 3.5%, respectively.

“Any significant attempt (of Tesla) to boost sales and revenue from here on will probably come at the cost of further falls in operating margin, on having to compete with BYD in China – one of its biggest markets – as well as increased competition elsewhere,” said Michael Hewson, chief market analyst at CMC Markets.

Tesla’s growth warning could fan worries over the rich valuations of heavily weighted megacap companies, also known as the “Magnificent 7”, that have been the key driver of a Wall Street rally since late 2023.

The benchmark S&P 500 climbed to its fourth straight record high close on Wednesday, after hitting an intraday all-time high for the third time in less than a week.

Adding to the gloom, Humana (HUM.N), opens new tab sank 14.1% as it was the latest among health insurers to forecast disappointing annual profit.

Peers like Dow-Jones component UnitedHealth (UNH.N), opens new tab and Cigna (CI.N), opens new tab lost 4.2% and 2.3%, respectively.

Traders are also betting more on a rate cut in May than in March, as per CME Group’s FedWatch Tool.

Among other movers, Boeing (BA.N), opens new tab dropped 2.6% after the U.S. Federal Aviation Administration barred the troubled planemaker from expanding production of its 737 MAX narrowbody planes.

Apple (AAPL.O), opens new tab slipped 0.2% after supplier STMicroelectronics (STMPA.PA), opens new tab forecast a more than 15% drop in first-quarter revenue, and data showed that the iPhone-maker’s smartphone shipments in China shrank 2.1% in the final quarter of 2023 from a year earlier.

American Airlines (AAL.O), opens new tab rose 4.0% as the carrier forecast largely upbeat annual profit, while Southwest Airlines (LUV.N), opens new tab gained 2.0% following a narrower-than-expected fourth-quarter loss.

Comcast’s (CMCSA.O), opens new tab added 1.3% as the media giant topped quarterly revenue estimates, while IBM (IBM.N), opens new tab jumped 6.3% after forecasting full-year revenue growth above estimates.

Ford Motor (F.N), opens new tab shed 0.8% as the automaker expects to record a pre-tax remeasurement loss of about $1.7 billion.

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