US and European futures are trading higher today while investors and traders are digesting the earnings results from Tesla and IBM. Traders are also going to be looking at the US GDP data as the number is going to drive the sentiment among them.
The report on the United States’ gross domestic product will be released today. The GDP number will be released at 8:30 a.m. Eastern Time. The data will be extensively analyzed by traders and investors as they will search for indications of the real strength or weakness of consumer health at the end of 2022. Many in the markets are expecting consumer spending to drop significantly as the year drew to a close.
Dow Jones reports that analysts forecast the gross domestic product of the United States to have grown by 2.8% in the fourth quarter, which is a slower rate of growth than the 3.2% pace recorded in the third quarter.
There is a great deal of disagreement among economists on the future course of the economy; a significant factor in this debate is the role of consumers. The dramatic decline of 1.1% in retail sales that occurred in December is being interpreted by some as evidence that consumers cut back on their spending at the end of the quarter, which may be a precursor to a recession. Others argue that it is too soon to write off the consumer and that there is still a chance that the economy would not decline.
Consumption is a key swing element in GDP, which represents the value of the final products and services produced in the U.S. economy. Since the consumer drives two-thirds of the U.S. economy, consumption is a big swing factor in GDP. When the central bank meets the following week, the Federal Reserve will be monitoring to see how well the consumer is holding up to determine how well the economy is doing overall.
On Wednesday, IBM announced quarterly revenue that topped Wall Street’s estimates. It reported earnings of $3.60 per share which matched expectations. The revenue number came well ahead of analyst forecasts of $16.4 billion. This was driven by higher-than-expected growth in the software and infrastructure areas of the company’s business.
Net income climbed 16% to $2.71 billion. About 3,900 positions, or 1.5% of IBM’s total staff, would be eliminated as a result of the company’s initiatives.
The software division of IBM reported earnings of $7.29 billion, which represents growth of about 3% and is higher than the average estimate of $7.12 billion.
The consulting division of the business brought in revenue of $4.77 billion for the firm, which is an increase of 0.5% but is significantly below the estimate of $4.8 billion.
After the closing bell, electric car manufacturer Tesla released its numbers, which exceeded expectations in both profit and sales. Following Elon Musk’s comments that the firm may be able to build 2 million automobiles in 2018, the stock price increased by more than 5% after hours. Adjusted earnings came in at $1.19 per share, which was higher than the $1.13 per share forecast. Revenue came in at $24.32 billion, which was more than the $24.16 billion forecast.
In its most recent quarterly earnings report, Tesla revealed automotive sales of $21.3 billion, indicating a year-over-year increase of 33%. In the fourth quarter of 2022, regulatory credits contributed $467 million to that total, an increase of almost half the amount compared to the same time period the year before.
Customers in the United States and China who have recently purchased new Teslas at higher costs were dissatisfied when Tesla lowered prices on its vehicles across the globe in late 2022 and this year, which triggered an immediate decrease in the pricing of used Teslas in the United States as well.
Despite this, it seems that the price reduction was successful in stimulating demand. On Wednesday, CEO Elon Musk stated the following on a call with shareholders and analysts: “Thus far in January we’ve seen the best orders year-to-date than ever in our history.” At this time, we are receiving orders that are approximately equal to double the pace of manufacturing.