Markets wobble as Tesla's rally does not spread in the stock market

Dow declined 147, advancers over decliners about 5-4 & NAZ went up 99.  The MLP index stayed near even at 284 & the REIT index was up 1+ to the 435s. Junk bond funds barely budged in price & Treasuries had limited buying which reduced yields marginally.  Oil slid fractionally lower but held above 70 & gold rebounded 17 to 2746.

Dow Jones Industrials

Boeing’s (BA), a Dow stock, machinists voted against a new labor deal that included 35% wage increases over 4 years, their union said, extending a more than 5-week strike that has halted most of the company's aircraft production, which is centered in the Seattle area.  The rejection by 64% of the voters is another major setback for the company, which warned earlier that it would continue to burn cash thru 2025 & reported a $6B quarterly loss, its largest since 2020.  A simple majority was needed for the contract to pass.  The strike is costing the company about $1B a month, according to S&P Global Ratings, & it has put BA's investment-grade credit rating at risk, which could drive up its borrowing costs just as it seeks to raise cash.  New CEO Kelly Ortberg had said reaching a deal with machinists was a priority in order to get the company back on track after years of safety & quality problems.  “My focus is getting everybody looking forward, get them back to work, improve that relationship,” Ortberg said when asked about the strike.  He laid out his vision for BA's future, which could includes slimming down the company to focus on core businesses.  Earlier this month, he announced BA will cut 10% of its global workforce of 170K people.  The stock fell 1.68.

Boeing machinists reject new labor contract, extending more than 5-week strike

Tesla (TSLA) reported 3rd-qtr earnings that topped estimates even as revenue came in just shy of expectations.  Revenue increased 8% in the qtr from $23.35B a year earlier.  EPS was 62¢, up from 53¢ a year ago.  Profit margins were bolstered by $739M in automotive regulatory credit revenue during the qtr.  Automakers are required to obtain a certain number of regulatory credits each year.  If they can't meet the target, they can purchase credits from companies such as TSLA, which has excess credits because it makes only electric vehicles.  Automotive revenue increased 2% to $20B from $19.6B in the same period a year earlier & is about flat since late 2022.  Energy generation & storage revenue soared 52% to $2.38B, while services & other revenue, which includes revenue from non-warranty repairs of TSLA vehicles, jumped 29% to $2.79B.  CEO Elon Musk said that his “best guess” is that “vehicle growth” will reach 20-30% next year, due to “lower cost vehicles” & the “advent of autonomy.”  Analysts were expecting a total increase in deliveries next year of about 15% to 2.04B.  The stock soared 39 (18%).

Tesla shares jump on profit beat, Musk’s prediction of at least 20% ‘vehicle growth’ next year

The yield on the 10-year Treasury dipped, easing from the near 3-month highs reached in the previous session, as traders continue to digest the trajectory of interest rate cuts.  The 10-year Treasury yield slid about 2 basis points to 4.22%, while the 2-year Treasury fell almost 3 basis points to 4.059%.  Yields move inversely to prices & 1 basis point equals 0.01%.  The benchmark 10-year Treasury yield had climbed to its highest level since late Jul yesterday, breaking above 4.25%.  Gregory Faranello of AmeriVet Securities said that the recent move higher may seem counterintuitive, but that “as we witnessed toward the end of 2023 these markets get way ahead of themselves and then reprice. It’s been like clockwork.”  “Unlike the most recent easing cycles, the Fed continues to shrink its balance sheet not grow it. This could very well change in time but it’s counter to what we had in 2008/2020, and even 2019,” Faranello continued.  Initial jobless claims data came out at 227K for last week, lower than the estimate of 245K.

10-year Treasury yield moves lower, pulling back from three-month highs

The excitement in TSLA's stock had only limited effect for the rest of the stock market.  The rejection of BA's offer to end its strike had a very chilling effect on the stock market.  Strikes & wars are not being viewed favorably by investors.