S&P 500 and Nasdaq Gain as Stocks Stabilize After Selloff; Tesla increases profits by 20%

Southwest sinks despite deal with activist, strong profits

43 minutes ago

Southwest Airlines (LUV) announced an agreement with Elliott Investment Management on Thursday morning, ending a months-long battle with the activist investor who had called for significant changes to the airline's leadership and business strategy.

Southwest agreed to reduce its board to 13 seats by its 2025 annual general meeting, with Elliott-sponsored candidates set to take five of those spots, while a sixth replacement seat goes to former Chevron (CVX) CFO Pierre Breber. The new board members will replace six departing members on Nov. 1 – including Executive Chairman Gary Kelly, who previously served as Southwest's CEO, the company said.1

As part of the agreement, “Elliott has agreed to drop the call for a special shareholder meeting in December as Elliott partner John Pike and portfolio manager Bobby make changes to create long-term shareholder value.”

News of the deal came shortly after Southwest reported third-quarter results that beat Wall Street expectations.

The airline reported total revenue of $6.87 billion, up nearly 6% from the same period last year and slightly better than analyst estimates compiled by Visible Alpha. Net income fell significantly from $193 million a year ago to $67 million compared to the same period last year, but did not fall as much as analysts had predicted, to $19.8 million.

The airline also said it would repurchase $250 million of shares in the fourth quarter, its first “accelerated share repurchase program” since it announced a new $2.5 billion share repurchase plan last month.

Following the release of quarterly results, shares of Southwest initially rose sharply in premarket trading, but began to fall with news of the Elliott agreement.

The stock was down 6% in afternoon trading, back to the same level as at the start of 2024.

–Aaron McDade

Tesla is optimistic about its prospects for 2025

1 hour and 18 minutes ago

Tesla (TSLA) shares are soaring a day after third-quarter results that Wedbush analysts called an “Aaron Judge-like performance.”

The company pointed to Tesla's forecast of a 20 to 30 percent increase in vehicle deliveries next year, “compared to current on-road numbers of 10 to 12 percent.” Maintaining his Outperform rating and $300 price target, Wedbush used the moment to compare Tesla to Judge – the slugger who put up mega numbers for baseball's New York Yankees this season.

However, not every analyst buys it. JPMorgan called the results a return to “exuberant forecasts” from Musk, “which may or may not be considered a forecast.”

The company's own forecast is 12% growth. JPMorgan maintained an Underweight rating but increased its price target to $135 from $130.

The electric vehicle maker posted third-quarter net income of $2.17 billion, or 62 cents per share, up from $1.85 billion, or 53 cents per share, a year earlier. This result was exceeded Analyst estimates as margins rose from 17.9% to 19.8%.

Shares of Tesla rose 21% to around $258 on Thursday afternoon, putting the stock back into positive territory for 2024.

–Andrew Kessel

Honeywell shares fall as the company lowers its outlook

3 hours and 23 minutes ago

Honeywell International (HON) shares fell Thursday morning after the aerospace and security equipment maker missed revenue estimates and lowered its sales forecast as demand for its industrial automation products collapsed.

Honeywell reported third-quarter revenue rose nearly 6% year-over-year to $9.73 billion, while analysts polled by Visible Alpha expected $9.89 billion. Adjusted earnings per share (EPS) of $2.58 beat forecasts.

Sales in the industrial automation segment fell 5% to $2.50 billion, which the company attributed to “volume weaknesses in warehousing and workflow solutions as well as security and sensor technologies.”

CEO Vimal Kapur said the company “managed a challenging environment in the third quarter.” Kapur added that it has made significant progress this year “in simplifying and optimizing the Honeywell portfolio,” including the planned spin-off of the Advanced Materials business and the exit from the personal protective equipment (PPE) business, as well as the completion of four Acquisitions.

The company said that based on the completion of these purchases, as well as third-quarter results and management's guidance for the remainder of the year, it increased its 2024 revenue forecast to 38.6-3, from the previous forecast of $39.1 billion .88 billion US dollars to 39.7 billion US dollars. The adjusted earnings per share range narrowed to $10.15 to $10.25 from $10.05 to $10.25.

Honeywell shares fell 4.5% in recent trading and were the second-largest loser in the Dow.

–Bill McColl

IBM shares fall due to disappointing sales

5 hrs 4 mins ago

Shares of IBM (IBM) fell nearly 6% early Thursday, becoming the biggest Dow loser after the company reported quarterly revenue that fell short of Wall Street estimates.

The company late Thursday reported third-quarter revenue of $14.97 billion, up 1% year-over-year and 2% in constant currencies, but below the consensus estimate of 15 from analysts surveyed by Visible Alpha .07 billion US dollars. Infrastructure revenue fell 7% and consulting revenue remained flat.

IBM posted a net loss of $330 million, or $0.36 per share, due to a $2.7 billion pension settlement. Analysts expected a profit of $1.72 billion, or $1.84 per share.

Arvind Krishna, IBM's chief executive officer (CEO), said the group expected fourth-quarter revenue growth to be “consistent” with the third quarter in constant currencies, driven by strong software sales. Krishna said that “the company’s AI book of business is now more than $3 billion, increasing more than $1 billion quarter-over-quarter.”

Even after early Thursday's decline, IBM shares are up nearly 35% this year.

–Nisha Gopalan

UPS shares are rising as the shipping giant returns to growth

6 hours and 18 minutes ago

Shares of United Parcel Service (UPS) jumped in premarket trading as the company reported third-quarter results that beat analysts' expectations.

The shipping giant reported revenue of $22.2 billion, above Visible Alpha analysts' consensus estimate of $21.94 billion. Net income was $1.54 billion, or $1.80 per share, above forecasts of $1.36 billion and $1.59 per share.

Thursday's results mark the first time in nearly two years that UPS posted year-over-year sales and profit gains, after the company and shipping rival FedEx (FDX) each reported declines following spikes in shipping demand during the pandemic.

UPS shares rose 9% to $143, trading at their highest in three months.

–Aaron McDade

Futures tied to major indices mixed

7 hours and 34 minutes ago

Futures tied to the Dow Jones Industrial Average fell 0.2%.

S&P 500 futures rose 0.5%.

Nasdaq 100 futures rose 0.9%.