S&P 500, Nasdaq Gain as Stocks Stabilize After Sell-Off; Tesla Jumps 20% On Earnings

Southwest Down Despite Deal With Activist, Strong Earnings

38 minutes ago

Southwest Airlines (LUV) announced a settlement with Elliott Investment Management Thursday morning, ending a monthslong battle with the activist investor that has been calling for significant leadership and business strategy changes at the carrier.

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

As part of the settlement, Elliott has agreed to drop its call for a December special shareholder meeting as Elliott Partner John Pike and Portfolio Manager Bobby Xu said they believe the airline is now well positioned to “enhance business performance, drive operational execution and evaluate additional changes to create long-term shareholder value.”

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

The airline reported $6.87 billion in total revenue, up nearly 6% from the same time last year and a bit better than analyst estimates compiled by Visible Alpha. Net income fell sharply year-over-year to $67 million from $193 million last year, but didn’t fall as far as analysts had projected, to $19.8 million.

The airline also said it plans to buy back $250 million in stock in the fourth quarter, the first “accelerated share repurchase program” since it announced a new $2.5 billion stock buyback plan last month.

Southwest shares had initially surged in premarket trading after the release of the quarterly results, but started falling with the news of the Elliott agreement.

The stock was down 6% in mid-afternoon trading, putting it back at the same level it started 2024.

–Aaron McDade

Tesla Jumps on Optimism About Outlook for 2025

1 hr 13 min ago

Tesla (TSLA) shares are roaring higher a day after the company’s third quarter results, which analysts at Wedbush called an “Aaron Judge-like performance.”

The firm noted Tesla’s prediction of 20% to 30% vehicle delivery growth next year, “compared to Street numbers in the 10%-12% heading into the print.” Wedbush maintained its Outperform rating and $300 price target, using the moment to liken Tesla to Judge—the slugger who put up mega-numbers for baseball’s New York Yankees this season.

Not every analyst is buying it, though. JPMorgan called the results a return to “ebullient forecasts” from Musk, “which may or may not qualify as guidance.”

The firm’s own outlook is 12% growth. JPMorgan maintained its Underweight rating but upped 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 ago. That result topped analysts’ estimates as margins rose to 19.8% from 17.9%.

Shares of Tesla jumped 21% to around $258 as of Thursday afternoon, pushing the stock back into positive territory for 2024.

–Andrew Kessel

Honeywell Shares Drop as Company Lowers Outlook

3 hr 18 min ago

Honeywell International (HON) shares declined Thursday morning after the aviation and safety equipment manufacturer missed sales estimates and lowered its revenue guidance as demand for its industrial automation products slumped. 

Honeywell reported third-quarter revenue rose almost 6% year-over-year to $9.73 billion, while analysts surveyed by Visible Alpha were looking for $9.89 billion. Adjusted earnings per share (EPS) of $2.58 exceeded forecasts.

Sales at its Industrial Automation segment declined 5% to $2.50 billion, which the company blamed on “volume softness in warehouse and workflow solutions and safety and sensing technologies.”

CEO Vimal Kapur said that the company “executed through a challenging environment in the third quarter.” Kapur added that it made significant progress this year “on the simplification and optimization of the Honeywell portfolio,” which included the planned spinning off of its Advanced Materials division and the exiting of its personal protective equipment (PPE) business, as well closing on four acquisitions.

The company said that because of the closings of those purchases, along with third quarter-results and management’s outlook for the rest of the year, it was lowering its 2024 sales forecast to a range of $38.6 billion to $3.88 billion from the earlier prediction $39.1 billion to $39.7 billion. It narrowed the range of adjusted EPS to $10.15 to $10.25 from $10.05 to $10.25. 

Honeywell shares were down 4.5% in recent trading and were the second-biggest decliner in the Dow.

–Bill McColl

IBM Stock Sinks on Disappointing Revenue

4 hr 59 min ago

IBM (IBM) shares were down nearly 6% early Thursday and were the biggest Dow decliner 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-currency terms but lower than the $15.07 billion consensus estimate of analysts polled by Visible Alpha. 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 charge. Analysts expected a profit of $1.72 billion, or $1.84 per share.

IBM Chief Executive Officer (CEO) Arvind Krishna said the group expects fourth-quarter revenue growth, in constant-currency terms, to be “consistent” with the third quarter, driven by strong software sales. Krishna said the firm’s “AI book of business now stands at more than $3 billion, up more than $1 billion quarter to quarter.”

Even after falling early Thursday, IBM shares are up nearly 35% this year.

–Nisha Gopalan

UPS Shares Surge as Shipping Giant Returns to Growth

6 hr 13 min ago

United Parcel Service (UPS) shares jumped in premarket trading as the company reported third-quarter results that came in above analysts’ expectations.

The shipping giant reported revenue of $22.2 billion, better than the $21.94 billion consensus estimate of analysts compiled by Visible Alpha. Net income came in at $1.54 billion, or $1.80 per share, above projections, which called for $1.36 billion and $1.59 per share.

Thursday’s results mark the first time in nearly two years that UPS returned to posting year-over-year revenue and profit gains, after it and shipping rival FedEx (FDX) each reported declines following peaks in shipping demand during the pandemic.

UPS shares were up 9% at $143, trading at their highest level in three months.

–Aaron McDade

Futures Tied to Major Indexes Mixed

7 hr 29 min ago

Futures tied to the Dow Jones Industrial Average were down 0.2%.

S&P 500 futures were up 0.5%.

Nasdaq 100 futures were up 0.9%.