Futures stall ahead of economic data; Tesla slides on growth warning

[January 25, 2024]  (Reuters) - Futures tracking the S&P 500 and the Nasdaq were subdued on Thursday, as investors paused after a technology-fueled Wall Street rally to size up a slew of key economic data, while Tesla slumped on a warning of slowing growth.

Tesla lost 7.8% in premarket trading after cautioning that sales growth may slow down sharply this year, while expecting to start production of next-generation electric vehicle at its Texas factory in the second half of 2025.

Other EV makers Rivian Automotive and Lucid Group fell over 2% each.

"Any significant attempt (of Tesla) to boost sales and revenues 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.

This comes in the face of concerns over whether earnings would support the rich valuations for 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, with Netflix surging nearly 11% on blowout quarterly results.

Intel's result is due after the market closes, with its shares up 1.2% in early trade.
 

Megacaps Alphabet, Meta Platforms and Nvidia were up between 0.2% and 1.1%, while Microsoft slipped 0.1% after its market value surpassed $3 trillion for the first time on Wednesday.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 15, 2023. REUTERS/Brendan McDermid/File Photo

Apple slipped 0.5% after supplier STMicroelectronics, an European chipmaker, forecast an over 15% drop in first-quarter revenue, and data showing the iPhone-maker's smartphone shipments in China shrank 2.1% year-on-year in the final quarter of 2023.

During the day, investors will keenly monitor data on fourth-quarter gross domestic product (GDP) and personal consumption expenditures advance, December durable goods and weekly jobless claims.

All eyes will be on the trend for inflation, any signs of weakness in the U.S. labor market and chances of a soft landing before the Federal Reserve's policy decision next week.

Bets of interest-rate cuts commencing as early as March have now shifted to May, seen at 87%, as per CME Group's FedWatch Tool.

At 5:36 a.m. ET, Dow e-minis were up 94 points, or 0.25%, S&P 500 e-minis were up 2.75 points, or 0.06%, and Nasdaq 100 e-minis were down 3.25 points, or 0.02%.

Aiding Dow futures, IBM jumped 8% after forecasting full-year revenue growth above estimates.

Among others, Ford Motor shed 1.1% as the automaker expects to record a pre-tax remeasurement loss of about $1.7 billion.

Boeing dropped 2.3% after the U.S. Federal Aviation Administration barred the troubled planemaker from expanding production of its 737 MAX narrowbody planes.

(Reporting by Ankika Biswasin Bengaluru; Editing by Maju Samuel)

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