Tesla started the "Magnificent Seven" earnings season on a muted note. A revenue beat was not enough to drown out a profit miss, and shares slipped as if sobered by reality. IBM, once the technological oracle, offered its own downbeat sermon: a slowdown in its cloud business, enough to drag its shares lower and Wall Street's mood with it.
Together, these titans represent the uneasy paradox of American capitalism in 2025: companies that dominate benchmarks but struggle to dominate sentiment. As the S&P 500 flirts with record highs, investors are squinting at every footnote in the earnings reports, searching for justification in valuations that have drifted into the stratosphere.
IBM's troubles are instructive. For years, it reinvented itself as a "hybrid cloud" champion, the sort of jargon that soothes analysts and confuses everyone else. Yet its growth engine seems to have caught a chill. Investors, conditioned to expect quarter-on-quarter miracles, responded with a sell-off that felt like a disillusionment.
Tesla's predicament is different. Once synonymous with boundless innovation, it now faces the arithmetic of margins and demand. Elon Musk's "Magnificent Seven" cohort, those behemoths whose collective weight makes up a third of the S&P, have propped up markets all year. But the pedestal trembles when even one of them stumbles.
The index's reliance on so few names is a structural fragility Even a modest earnings miss can send tremors through portfolios now so concentrated they resemble a high-wire act without a net.
One bright spot came from the quantum realm. Shares of IonQ, D-Wave, and Rigetti Computing leapt after reports that the Trump administration was considering taking equity stakes in exchange for federal funding.
Elsewhere, energy stocks rose on new U.S. sanctions against Russian oil producers, while Honeywell and American Airlines delivered cheerier updates. Yet even these gains were tinged with geopolitical unease. The European Union, tightening the screws on Moscow's "shadow fleet", seemed to confirm that oil markets will remain a theatre of sanctions and counter-sanctions for some time.
If investors sound nervous, it's not only because of earnings. The statistical tap is still tuned off as the federal government shutdown is now three weeks deep. No jobless claims or housing figures to sink our teeth into. Friday's core CPI will be the only stat published in the foreseeable future, and is expected to stay at 3.1%.
Beyond Wall Street's spreadsheets, the world keeps rearranging itself. Canada promises “bold” risks to restart its sluggish economy. Unilever trims its corporate waistline, shedding ice cream to focus on beauty. In Paris, Kering finds solace as Gucci's glamour returns. And in Seoul, the Bank of Korea remains immovable at 2.5%, cautious amid global uncertainty.
It will be a busy day for corporate earnings, especially since Thursday is traditionally the busiest day of the week in this regard. Around 90 companies with a market capitalization of more than $10 billion are expected to report, including Intel, T-Mobile US, Unilever, Thales, Dassault Systèmes, Roche, Blackstone, and Ford Motor.
Asia-Pacific was mostly down today. India (+0.7%) and Australia (stable) did rather well. Japan is consolidating heavily, down 1.4%, while South Korea lost 0.8%. The declines were more moderate in Hong Kong (-0.2%) and Shanghai (-0.6%). Europe is slightly bearish, with the Stoxx Europe 600 up 0.1%.
Today's economic highlights:
On today's agenda: business confidence in France; in the United States, the Chicago Fed National Activity Index, new unemployment claims, and existing home sales, including GM existing home sales. See the full calendar here.
- Dollar index: 99,122
- Gold: $4,110
- Crude Oil (BRENT): $64.95 (WTI) $6149
- United States 10 years: 3.98%
- BITCOIN: US$109,150
In corporate news:
- T-Mobile raised its annual forecast after adding 1 million postpaid subscribers in Q3, driven by iPhone upgrades and its expanding direct-to-cell satellite plan.
- Union Pacific posted a 9% profit rise in Q3, supported by strong pricing and despite $41 million in merger costs related to its planned acquisition of Norfolk Southern.
- PG&E forecast 2026 profit slightly above expectations due to rising electricity demand from AI and crypto data centers, and reported better-than-expected Q3 earnings.
- Honeywell raised its 2025 profit outlook and beat Q3 estimates, helped by strong aerospace demand, despite the Solstice spinoff impact.
- Blackstone beat Q3 profit estimates with a 48% jump in distributable earnings, fueled by strong private equity and credit business activity.
- Valero Energy beat Q3 profit estimates thanks to improved refining margins and record throughput levels.
- Dow reported a smaller-than-expected loss in Q3 as U.S. asset gains and cost cuts helped offset global chemical price weakness.
- Allegion raised its 2025 profit forecast on strong non-residential demand and successful price hikes despite tariff impacts.
- West Pharmaceutical boosted its annual profit forecast on strong demand for components used in injectable GLP-1 drugs like those from Eli Lilly and Novo Nordisk.
- Hasbro raised its annual outlook as digital gaming sales, including Magic: The Gathering, helped offset weakness in traditional toys.
- Paramount is seen as the leading contender to acquire Warner Bros Discovery, backed by strong financial resources and political connections.
- IBM shares fell over 6.5% after slowing cloud software growth raised investor concerns despite an overall earnings beat.
- Tesla shares dropped after Q3 profit missed estimates due to rising costs and fading regulatory credits, even as record vehicle sales pushed revenue to a new high.
- Molina Healthcare shares plunged 20% after cutting its profit forecast for the third time in 2025, citing surging medical costs in its ACA plans.
- MercadoLibre will begin selling Casas Bahia products on its platform in Brazil, targeting growth in electronics and home appliances.
- Eli Lilly licensed Cipla to sell its weight-loss drug Mounjaro in India under a new brand, expanding local access to GLP-1 therapies.
- Google is set to invest in THG Ingenuity, the e-commerce arm of THG, potentially converting the stake to equity at a valuation above £750 million.
- UPS asked an Indian court to block a decision allowing cross-examination of its executive in a price-fixing probe, arguing it had already been cleared.
- Boeing named Landon Loomis as president of its China unit amid geopolitical tensions, hoping his deep ties and Mandarin fluency will help secure major jet deals.
- Woodside Energy sold a 10% stake in its Louisiana LNG project to Williams, gaining pipeline expertise and funding as construction ramps up.
- Weight-loss startup SheMed raised $50 million to expand across the UK, targeting women using Wegovy and Mounjaro with personalized plans.
- Polymarket is seeking funding at a valuation of up to $15 billion as interest surges in prediction markets post-election.
- Southwest Airlines surprised with a Q3 profit and forecast record Q4 sales, driven by strong travel demand despite delays in seat retrofitting.
- OpenAI will offer UK data residency options starting Friday, part of a government partnership to boost public service efficiency and AI use.
- O'Reilly Automotive raised its revenue forecast after beating Q3 estimates on solid demand for replacement auto parts amid new car affordability concerns.
- Kinder Morgan reported higher Q3 profit on strong gas demand and sees long-term growth driven by power generation and LNG exports.
- Globe Life posted a strong Q3 profit on robust underwriting income and higher investment returns amid easing macroeconomic conditions.
- Las Vegas Sands beat Q3 profit expectations as demand surged at its Singapore and Macau resorts, prompting a dividend and buyback increase.
- Reddit sued Perplexity for allegedly scraping its data to train AI without a license, escalating its fight to protect content used in AI training.
- FirstEnergy beat profit expectations in Q3 on higher rates and strong demand, and raised its capital investment program by 10%.
- Amazon was sued by New Jersey for allegedly discriminating against pregnant and disabled warehouse workers by denying accommodations and firing some.
- JERA acquired a shale gas asset in Louisiana for $1.5 billion.
- Citigroup appointed Jane Fraser as chair of the Board of Directors, alongside her CEO role.
- Lam Research's fiscal Q1 profit and revenue rose, driven by demand for semiconductor equipment.
- Tamboran Resources Corp initiated a public offering of 2.3 million shares at $21 per share.
- Netflix fell 10% due to a $619 million tax settlement in Brazil.
- AT&T reported revenue growth despite a drop in mobility sales.
Analyst Recommendations:
- Avery Dennison Corporation: JP Morgan upgrades to overweight from neutral with a price target raised from USD 182 to USD 195.
- Citigroup Inc.: Punto Research downgrades to hold from buy and raises the target price from USD 96.40 to USD 98.93.
- Enphase Energy, Inc.: Mizuho Securities downgrades to neutral from outperform and reduces the target price from USD 50 to USD 37.
- Halliburton Company: Freedom Broker downgrades to hold from buy with a target price of USD 32.
- Take-Two Interactive Software, Inc.: Arete Research downgrades to neutral from buy and raises the target price from USD 263 to USD 280.
- Us Bancorp: Deutsche Bank upgrades to buy from hold with a target price of USD 52.50.
- Vertiv Holdings Co: KGI Securities Co Ltd upgrades to outperform from neutral with a price target raised from USD 150 to USD 210.
- Aes Corporation (The): Jefferies maintains its underperform recommendation and raises the target price from USD 9 to USD 12.
- Amphenol Corporation: Seaport Global maintains its buy recommendation and raises the target price from USD 125 to USD 155.
- Lam Research Corporation: BNP Paribas Exane maintains its neutral recommendation and raises the target price from USD 80 to USD 140.
- Lennox International Inc.: Vertical Research Partners maintains its hold recommendation and reduces the target price from USD 675 to USD 500.
- Moderna, Inc.: Leerink Partners maintains its underperform recommendation and reduces the target price from USD 16 to USD 12.
- Mueller Industries, Inc.: Freedom Broker maintains its buy recommendation and raises the target price from USD 99 to USD 121.
- Robert Half Inc.: JP Morgan maintains its neutral recommendation and reduces the target price from USD 45 to USD 29.
- Sprouts Farmers Market, Inc.: JP Morgan maintains its neutral recommendation and reduces the target price from USD 159 to USD 124.
