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Tesla's Bitcoin-Fueled Profit, Peak Earnings Season, FOMC - What's Moving Markets

EconomyApr 27, 2021 06:35AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- Tesla (NASDAQ:TSLA) reported record profits, which were, however, entirely due to sales of emissions credits and speculative gains on Bitcoin. The Federal Reserve starts a two-day meeting amid growing signs of a global recovery. Earnings season reaches its peak with industrial blue-chips early on and Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) due after the close. The rally in commodities goes on and on, and even takes crude oil along with it ahead of U.S. inventory data due later. Here's what you need to know in financial markets on Tuesday, April 27th.

1. Tesla's record earnings disappoint

Tesla reported record earnings for the first quarter but its stock fell 2% in after-hours trading on concerns about the underlying profitability of its carmaking business.  The $438 million reported net profit was less than the $509 million expected.

Operating losses were masked by $518 million in sales of regulatory credits and a $101 million gain on the sale of some 10% of the $1.5 billion in Bitcoin that it had bought for Treasury purposes. While deliveries more than doubled, revenue rose ‘only’ 74%, as the lower-margin Model 3 accounted for a growing share of the sales mix.

Goldman Sachs (NYSE:GS) nonetheless raised its price target for the stock to $860 on the back of the results.

Megacap earnings season continues after the closing bell Tuesday with Microsoft and Alphabet set to report.

2. Fed meeting starts as outlook brightens

The Federal Reserve kicks off a two-day meeting which is expected to result in no change to policy but may produce a change in emphasis in the Fed’s guidance, as signs of a recovery become ever more clear.

Two of what in recent years have been the world’s gloomiest central banks set the tone overnight: both the Bank of Japan and the Swedish Riksbank raised their outlooks (although neither took its foot off the stimulus pedal). In addition, South Korea reported stronger-than-expected growth of 1.6% and Italian business confidence hit its highest level in three years.

The domestic backdrop to the Fed’s meeting this week will include house price data at 7 AM ET (1100 GMT) the Conference Board’s consumer confidence index at 8 AM and the Dallas and Richmond Federal Reserve’s monthly business surveys from 10 AM onward.

3. Earnings season reaches its peak 

Even before the Megacaps report, Tuesday is peak earnings season, with updates coming in from all quarters of the economy. UPS got the ball rolling with earnings and revenue well ahead of forecasts, but declined to give guidance for the full year as it looked ahead to the fading boost to shipment volumes from the pandemic.

Other companies due to report early include Amgen (NASDAQ:AMGN), Texas Instruments (NASDAQ:TXN), Eli Lilly (NYSE:LLY), General Electric (NYSE:GE), Raytheon and 3M, while Starbucks (NASDAQ:SBUX), Visa (NYSE:V) and Advanced Micro Devices (NASDAQ:AMD) report after the close.  In Europe overnight, HSBC posted stronger-than-expected earnings, while UBS reported a $774 million hit from the Archegos Capital fiasco.

U.S. stocks are set to open largely flat on Tuesday after a mixed performance on Monday. By 6:30 AM ET, Dow Jones futures and S&P 500 futures were effectively unchanged, while Nasdaq 100 futures rose 0.1%.

4. Palladium hits new record as commodities run continues

The rally in commodities continued, with Palladium Futures hitting a new record high of $2,951 an ounce, in response to demand from a resurgent automotive industry that – as indicated by Tesla’s sales of regulatory credits – still needs to work harder on cutting emissions.

Copper futures also hit a new 10-year high – another indirect expression of the boom in electric vehicles – while US Soybeans Futures and US Corn Futures both rose more than 3.5% in overnight trading.

Corn and US Wheat Futures in particularly were helped by signs of ongoing dry conditions in Brazil, a major producer of both grains.

5. OPEC revises up demand forecasts; API inventories due 

In contrast to Monday, crude oil prices joined in the general commodities rally, on the back of an upbeat forecast for oil demand from OPEC’s technical experts ahead of the ministerial meeting with Russia and others on Wednesday.

By 6:30 AM ET, U.S. crude futures were up 0.8% at $62.39 a barrel, while Brent crude futures were up 0.8% at $65.55 a barrel. Sentiment in the sector was also helped by BP's (NYSE:BP) statement that it will resume stock buybacks in the third quarter, confident that it can generate free cash flow at crude prices above $45 a barrel.

The American Petroleum Institute will disclose its latest data on U.S. crude and product stockpiles at 4:30 PM as usual.

 

 

 

Tesla's Bitcoin-Fueled Profit, Peak Earnings Season, FOMC - What's Moving Markets
 

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Comments (9)
Alan Reeves
Alan Reeves Apr 27, 2021 1:10PM ET
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Elon Musk is the smartest alien on Earth
Allatra Yiveh
AllatraYiveh Apr 27, 2021 12:40PM ET
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TSLA is now a stock whose one of company's main profit is from gambling Bitcoin??
Allatra Yiveh
AllatraYiveh Apr 27, 2021 12:40PM ET
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TSLA is now a stock whose one of company's main profit is from gambling Bitcoin??
Onyenagubo Nnamdi
Onyenagubo Nnamdi Apr 27, 2021 11:36AM ET
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how can I make payment
Onyenagubo Nnamdi
Onyenagubo Nnamdi Apr 27, 2021 11:36AM ET
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please I need help I'm new
Muhammad Asif
Muhammad Asif Apr 27, 2021 10:59AM ET
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GP margin un match its stock prices
Neal Ferrell
Neal Ferrell Apr 27, 2021 9:01AM ET
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Did I miss something, FOMC? Where the news
Charles Ngari
Charles Ngari Apr 27, 2021 9:01AM ET
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not yet
Sheunesu Makoni
Sheunesu Makoni Apr 27, 2021 9:01AM ET
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fomc is tomorrow
Rajeev Raj
Rajeev Raj Apr 27, 2021 8:52AM ET
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Move to stellar is imminent as soon trans border transaction will be the norm of the day..bitcoin cash parking and stellar for transaction. Bitcoin too volatile at that high valuation for either..whereas bcash and stellar holding steady
Helio Contas
Helio Contas Apr 27, 2021 7:00AM ET
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How can a company make so much money made solely by speculative expectations?
Olivier Garce
Olivier Garce Apr 27, 2021 7:00AM ET
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Looks the numbers. It’s just math.TESLA WILL BE SO BIG
Charles Ngari
Charles Ngari Apr 27, 2021 7:00AM ET
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depends with how much they speculated with.
 
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