Get all your news in one place.

100’s of premium titles.
One app.

Start reading

Get all your news in one place.

100’s of premium titles. One news app.

Start reading

The Street

Charley Blaine

Tesla and Boeing may rock markets this week

Mỹ Boeing Tesla Inc. Nvidia

Stocks ended Friday with what seemed like a slow day, even though the Standard & Poor's 500 Index and the Dow Jones Industrial Average both closed at new highs.

The S&P 500 was up just 0.4% to nearly 5,865, and the Dow added just 0.09%, all of 36 points, to finish at 43,276. The Nasdaq Composite Index rose 0.6% to 18,490. It wasn't a new high, though Nvidia (NVDA) did hit a new high.

Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter

Investors seem ecstatic. There are projections that the S&P 500 will rise to at least 6,200, a 5.7% gain from 5,865 now. It would mean a 30% gain for the year, the biggest since 1997. There are bullish calls on the Nasdaq and on tech stocks overall.

The major averages closed higher for a sixth straight week on Friday. In theory, the markets could make a run at the record for the number of weekly gains.

That was nine weeks between the end of October 2023 and the end of trading in 2023, and another nine-week stretch ended in January 2004.

A big week for earnings

The pieces in place suggest a seventh week of gains is possible:

The third-quarter earnings season is about to hit its heaviest few weeks.

The big macro trends are favorable:

Job growth looks steady.
Oil prices are sliding in spite of all the Middle East tensions.
Gasoline prices are moving lower.
Rising mortgage rates are keeping home sales in check for now.
All 11 S&P 500 sectors are solidly ahead on the year. Real estate is up 11.5%, partly because the Federal Reserve is expected to continue cutting rates. The leaders: Information Technology, up 33%; Utilities, up 29%; Communications Services, up 28.3%; and Financials, up 26.5%.

The risks to the extreme bullishness

The obvious risks are:

A disputed Presidential election. You can bet the Trump-Vance and Harris-Walz campaigns are organizing their lawyers.

The Middle East crisis spin into major war. So far, despite all the death and destruction, the long-lived conflicts have remained geographically focused. That's one reason why crude oil dropped below $70 a barrel on Friday.

The unknown unknown. The bullishness seen this past week (which includes heavy betting that Donald Trump will win the election) does not allow for a serious mistake. It's so pervasive that "It makes me nervous," said Los Angeles money manager Julie Biel, a CNBC's Fast Money program participant, on Friday.

She's right: Strange things can and will happen. The 2008-09 financial crisis erupted because too many people in the financial industry failed to see how vulnerable their institutions were to loose lending practices.

Tesla and Boeing tops the week's earnings reports

For drama, Tesla (TSLA) will provide it.

The shares fell 8.8% a day after the company unveiled its Cybercar, the taxi vehicle CEO Elon Musk promised last spring. As of Friday, when the shares finished at $220.70, they're still down 7.6% from Oct. 10 and off 15.6% for the month.

So, Wednesday's earnings report, which comes after the close, is important.

The company is expected to report 58 cents a share in earnings, up from 53 cents a share a year ago. The revenue estimate is $25.6 billion, up 8.8%, mostly because of growth in its solar power business. However, its vehicle business faces soft sales and more competition.

Expect questions about Tesla's driver assistance system, which Tesla calls Full-Self Driving. There have been reports of accidents that occurred in reduced visibility conditions — sun glare, fog, or airborne dust

A Tesla Cybertruck is displayed during the Viva Technology show in Paris in May.
Chesnot/Getty Images

More Health Care:

Boeing shares may rise if workers OK contract

But that's a big if.

The 33,000 striking workers will vote Wednesday on a new Boeing (BA) contract offer. The company and machinists' union agreed to the vote on Saturday.

Union management didn't endorse the deal but told members it was "worthy of your consideration."

The agreement came about, in part, because Labor Secretary Julie Su was involved. She met separately this past week with Boeing and union negotiators to try to break the impasse.

It includes a 35% wage increase over four years. It does not restore the old Boeing pension plan, a key union demand.

The workers, who have been on strike for more than five weeks, may feel the need to return to work. Boeing needs planes to sell that customers feel confident about.

Investors want to see the company rebuild its finances. The shares are down 40.5% in 2024. They were off slightly Friday at $155 but were up 2.6% on the week.

Boeing has $45 billion of net debt and has been losing money on its defense business. It's also been at risk of having its bonds downgraded to junk. It has been working on a financing package that would include a new stock offering and loans.