Tesla announces TI’s earnings, Starbucks suspends forecast

Investing.com – U.S. stock futures were largely subdued on Wednesday ahead of a series of new quarterly earnings reports, including numbers from electric car maker Tesla (NASDAQ:). Texas Instruments (NASDAQ:) reports stronger-than-expected third-quarter profit, sending the chipmaker’s shares higher during extended trading hours. Meanwhile, Starbucks (NASDAQ:) shares are falling in after-hours trading after the coffee chain suspended its annual financial guidance.

1. Futures subdued

U.S. stock futures hovered around the zero line on Wednesday as investors digested the first busy day of third-quarter earnings season and awaited further corporate results this week.

As of 3:31 a.m. ET (07:31 GMT), the contract had lost 115 points, or 0.3%, while remaining mostly unchanged.

The technology giant posted a 0.2% gain on Tuesday, driven by a continued recovery in Big Tech stocks after a period of market volatility over the summer. Shares of these companies got a boost from the Federal Reserve’s decision to cut interest rates by an outsized 50 basis points in September.

However, Wall Street’s other two major indexes ended the day in the red as investors expected the U.S. benchmark to jump to its highest level since July 26. In the wake of strong recent economic data and deficit fears, some traders are now trying to gauge whether the Fed will still be inclined to cut rates again this year.

Pressure from higher bond yields weighed on the benchmark. which fell slightly by 3 points or 0.1%. The 30-value share also fell slightly by 7 points or 0.02%.

“While market psychology has become somewhat bleak over the last 48 hours, this is only a result of the decline in stocks and not a dramatic shift in fundamentals,” Vital Knowledge analysts said in a note to clients.

2. Tesla earnings ahead

Tesla’s quarterly results after the closing bell on Wednesday are expected to highlight its latest gains.

Shares of the Elon Musk-led electric car giant took a hit this month after it unveiled its long-awaited robotaxi, which some investors said lacked concrete details. Year-to-date, Tesla shares have underperformed the S&P 500, losing about 12%, while the broader index has gained 23.4%.

Although investors are more optimistic about the U.S. economy after a robust jobs report and the Fed’s half-percentage-point interest rate cut last month, a weak report from Tesla could reignite worries about technology stock valuations.

Stretched valuations, high expectations for corporate results and possible volatility related to the upcoming US presidential election could make stocks vulnerable to a decline.

3. Texas Instruments earnings beat estimates

Shares of Texas Instruments rose during extended trading hours after the chipmaker reported third-quarter profit that beat analysts’ expectations.

Earnings per share were $1.47 on revenue of $4.15 billion in the three months ended Sept. 30, the maker of semiconductors that power electronic devices said. Analysts surveyed by Investing.com had expected earnings per share of $1.38 on revenue of $4.12 billion.

In a conference call after the results, Chief Executive Officer Haviv Ilan said the company was benefiting from the “momentum” for electric vehicles in China, adding: “Our content is growing there” and “really drove growth in the third quarter.”

Sales of Texas Instruments’ automotive-focused products increased in the high single digits from the previous quarter, Ilan noted.

The numbers come as markets are closely watching the results of global semiconductor companies to gauge the outlook for chip demand.

4. Starbucks suspends guidelines

Starbucks shares plunged after hours after the coffee chain suspended its outlook for the coming fiscal year.

In a preliminary filing, the company also noted that same-store sales, net sales and profit declined in the fourth quarter ended Sept. 29 due to subdued demand for its higher-priced items in the United States.

The announcement underscores the challenge new CEO Brian Niccol faces as he tries to turn Starbucks’ fortunes around. Niccol, who unexpectedly took over the company’s leadership in early August, said a “fundamental change” in the company’s strategy was needed “so that we can get back on track for growth.”

Specifically, Niccol argued that Starbucks’ drink and food menu had become “overly complex.”

However, Starbucks increased its quarterly dividend to $0.61 from $0.57, a move aimed at boosting investor confidence in its turnaround plans, CFO Rachel Ruggeri said.

5. Crude slip-ups

Oil prices fell after the release of industry data that suggested a rise in U.S. crude inventories, but ongoing tensions in the Middle East limited losses.

At 3:31 a.m. ET, the contract fell 0.6% to $75.62 a barrel, while futures (WTI) traded 0.6% lower at $71.29 a barrel.

Data from the American Petroleum Institute released Tuesday showed U.S. oil inventories rose by 1.643 million barrels last week, sparking fears that U.S. fuel demand could cool. Official U.S. government oil inventory data from the Energy Information Administration is expected later on Wednesday.

Crude oil prices rose slightly in the previous session after Israel said it had killed Hashem Safieddine, heir to the throne of late Hezbollah leader Hassan Nasarallah, who was killed in an Israeli strike last month. Concerns about a possible escalation of the conflict between Israel and both Hamas and Hezbollah have led traders to place a risk premium on crude oil prices amid possible supply disruptions in this oil-rich region.

(Reuters contributed reporting.)