Stock Market Today Mid-Morning Updates

On Thursday, the Dow Jones Industrial Average rose by 170 points. Could the recent sell-offs due to the Fed’s hawkish approach to rising inflation be over? ServiceNow (NYSE: NOW) CEO Bill McDermott seems to think so for software stocks at least. He says that customers are more focused than ever on digitizing their businesses. Despite these inflationary times, the company is still expanding into employee experience, customer experience, and creator workflow revolution on a low code platform.

On matters relating to the Federal Reserve, “I don’t think it’s possible to say exactly how this is going to go, and we’re going to need to be, as I’ve mentioned, nimble about this,” says Federal Reserve Chair Jerome Powell. This comes after the Fed’s January policy-setting meeting on Wednesday. In the outcome of the meeting, the Fed has sent a signal that its first interest rate hikes of the pandemic era would likely start in March. Investors have been anticipating more insight from the Fed on measures that it will take to mitigate inflation.

Among the Dow Jones leaders, shares of Apple (NASDAQ: AAPL) are up 2.41% today while Microsoft (NASDAQ: MSFT) is also up by 3.39%. Home Depot (NYSE: HD) and Nike (NYSE: NKE) ticked higher on Thursday as well. Among the Dow financial leaders, Visa (NYSE: V) and Goldman Sachs (NYSE: GS) are trading higher at 0.70% and 0.68% respectively.

Shares of electric vehicle (EV) leader Tesla (NASDAQ: TSLA) are down by 4.86% on Thursday. Rival EV companies like Rivian (NASDAQ: RIVN) and Lucid Group (NASDAQ: LCID) are also down by 5.31% and 8.35% today. Chinese EV leaders like Nio (NYSE: NIO) and Xpeng Motors (NYSE: XPEV) are also trading lower at 2.43% and 5.18% respectively.

Dow Jones Today: Treasury Yields and Unemployment Claims Drop

Following the stock market opening on Thursday, the S&P 500, Dow Jones, and Nasdaq are trading 1.26%, 1.29%, and 1.06% higher. Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (NASDAQ: QQQ) is up by 1.24% on Thursday, while the SPDR S&P 500 ETF (NYSEARCA: SPY) is also up by 1.35%.

The 10-year Treasury ticked down to 1.82% on Thursday morning after closing below 1.85% on Wednesday, after the Fed signaled that it could start raising interest rates in March for the first time in more than three years. Also, the Labor Department reported that first-time unemployment claims fell to 260,000. This falls back in line with economists’ predictions, suggesting that some of the Omicron-related disruptions may be subsiding.

U.S. Gross Domestic Product Expands, Beating Expectations

Today, the Bureau of Economic Analysis (BEA) released its first estimate of fourth-quarter GDP on Thursday, saying that GDP rose at an annual rate of 6.9%, compared to estimates of 5.5%. The increase was above the unrevised 2.3% growth in the previous quarter. Furthermore, this is despite a surge in omicron cases that contributed to an increase in sick workers and slower hirings.

The U.S. economy grew at a much better pace than expected to end 2021 due to a sizeable boost in inventories and consumer spending. A jump in consumer spending yielded a record holiday shopping season helped to contribute to gains in the fourth quarter. The GDP report reflects an overall solid period for the economy after output had slowed considerably over the summer. 

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Tesla Reports Solid Quarterly Figures; No Plans For New Cars In 2022 Amidst Supply Chain Shortages

Regarding EV earnings, Tesla is trading lower by 2.34% today despite news of its latest quarterly earnings report. In detail, the EV titan is sitting on an earnings per share of $2.52 on revenue of $17.72 billion for its fourth quarter. Notably, this would mark a record quarterly revenue for Tesla. For comparison, Wall Street’s estimates were at an earnings of $2.36 alongside revenue of $16.57 billion. In other words, Tesla beat expectations on both fronts. Regarding its performance year-over-year, Tesla posted sizable gains of 65% in its total revenue. At the same time, automotive revenue and net income for the quarter surged by 71% and 760% respectively. 

Even so, the company provided a somewhat conservative outlook on its portfolio expansion plans for 2022. For the most part, this is evident from CEO Elon Musk’s latest update during Tesla’s earnings call. Namely, Musks notes that Tesla will not be introducing any new models for the current fiscal year. According to the CEO, this is due to supply limits with chips. Not to mention, Tesla’s main factories are not running at capacity, this has been the case for the past few quarters. Musk adds, “supply chain became the main limiting factor, which is likely to continue through 2022.” As such, Tesla’s plans for a $25,000 EV and Cybertruck are likely shifting towards 2023 and beyond.

Regardless, it is important to note that despite the less-than-ideal operating conditions, Tesla continues to power forward. To point out, Tesla hit record production figures in 2021 and is already planning expansions beyond its current annual production capacity of 600,000. As such, I could understand if TSLA stock is the play for investors looking to bet on EVs now.

TSLA stock chart
Source: TD Ameritrade TOS

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Levi Strauss Surges On Earnings Beat And Upbeat 2022 Guidance

At the same time, clothing industry titan Levi Strauss (NYSE: LEVI) is making a splash in the stock market today. LEVI stock is now surging by 13.43% as of today’s opening bell. Diving in, the company recorded earnings of $0.41 a share on revenue of $1.7 billion. This would exceed analyst forecasts of $0.40 and $1.68 billion respectively. Furthermore, Levi’s net income for the quarter is currently up by a massive 199% year-over-year as well. Overall, CEO Chip Bergh believes that these results reflect “robust financial performance, marked by sequential improvement through the year, despite navigating ongoing business disruption from the pandemic.

Additionally, commenting on the company’s performance throughout the fiscal year is CFO Harmit Singh. Singh highlights that Levi achieved “multi-decade record revenues and profitability.” He cites the company’s brand strength, and leveraging of its pricing power as key contributors to Levi’s current momentum. Looking forward, Levi also appears to be optimistic about its growth prospects in the current fiscal year. It currently sees net revenues growing by 11% to 13% year-over-year. Because of all this, investors may want to keep an eye on LEVI stock in the stock market today.

LEVI stock chart
Source: TD Ameritrade TOS

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