U.S. stock index futures signalled a strong rebound Thursday, primarily driven by Tesla’s unexpectedly positive earnings forecast, offering a ray of hope for technology investors after a challenging selloff in previous sessions. The electric vehicle maker’s upbeat outlook has emerged as a potential catalyst for broader market recovery, particularly among the influential Magnificent Seven mega cap stocks.
Tesla shares surged nearly 12% in premarket trading after the company delivered robust third-quarter profits and surprised investors with a projected 20-30% sales growth forecast for the coming year. “Tesla bounced back from the underwhelming launch of its Robotaxi with a strong set of third-quarter earnings. These numbers represent a return to form after an underpowered second quarter, when profitability dropped sharply,” noted Russ Mould, investment director at AJ Bell.
The positive sentiment from Tesla’s results rippled through other technology heavyweights, with Nvidia rising 1%, Amazon.com advancing 0.8%, and Meta Platforms gaining 0.9%, helping to recover some ground lost during Wednesday’s steep decline. As the first of the Magnificent Seven to report this earnings season, Tesla’s performance is being closely watched as a potential indicator for next week’s slate of major tech earnings.
Market indicators reflected this optimism, with S&P 500 E-minis up 26.75 points (0.46%) and Nasdaq 100 E-minis surging 168.25 points (0.83%). However, Dow E-minis showed more modest movement, down 53 points (0.12%), highlighting the tech-centric nature of the day’s rally.
The broader market context remains complex, as stocks have recently retreated from record levels due to multiple factors: revised expectations about Federal Reserve rate cuts, rising Treasury yields, mixed corporate earnings, and uncertainty surrounding the upcoming U.S. election. “Price action speaks to a market that was overly rich and well-owned, and as the cracks started to emerge the signal was there for others to follow,” explained Chris Weston, head of research at Pepperstone.
In other corporate news, Boeing shares dropped 2.7% following factory workers’ rejection of a contract offer, extending a costly five-week strike. UPS provided a bright spot, gaining 6.7% after reporting increased third-quarter profit driven by rebounding volumes and successful cost-cutting measures. This positive news also lifted shares of rival FedEx by 2.1%.
The earnings season has shown mixed results across sectors. Southwest Airlines rose 5.5% on an unexpected quarterly profit, while IBM declined 5% after missing revenue estimates. Newmont, the gold producer, fell 5.8% due to higher costs and lower Nevada output affecting profits. According to LSEG data, approximately 29% of S&P 500 companies have reported earnings this quarter, with an impressive 81% exceeding analyst expectations.
Treasury yields remained near their highest levels since late July, though showing slight easing on Thursday. Market participants are now turning their attention to upcoming economic data, including S&P Global flash PMIs, September new home sales figures, and weekly jobless claims. Comments from Cleveland Fed President Beth Hammack are also anticipated to provide additional insight into monetary policy direction.
The day’s trading patterns suggest investors are cautiously returning to risk assets, particularly in the technology sector, while maintaining awareness of broader economic challenges. The market’s response to Tesla’s results highlights the ongoing importance of corporate earnings in driving investor sentiment, even amid broader macroeconomic uncertainties.