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U.S. stocks struggled for direction on Thursday, inching marginally higher as investors sifted through a heavy slate of corporate earnings while simultaneously grappling with escalating geopolitical risks, particularly renewed tensions between the U.S. and China.
By mid-morning, the Dow Jones Industrial Average was up a modest 35 points (0.1%), the S&P 500 gained 0.1%, and the NASDAQ Composite traded nearly flat. While the earnings season has generally been robust—with approximately 86% of reporting firms beating analyst estimates—mixed reports from key corporate giants injected a note of caution into the market.
Tesla’s Q3 Miss Dampens Earnings Optimism
The biggest corporate headliner was Tesla (NASDAQ:TSLA), whose shares fell sharply after the electric vehicle (EV) maker reported a net income drop of 37%, missing Wall Street’s earnings estimates. Despite achieving a record quarterly revenue of $28.1 billion, higher research and development spending and tariff-related costs squeezed margins. The disappointing results come as the EV sector braces for slowing U.S. demand following the expiration of a crucial EV tax credit.
In other big tech news, IBM (NYSE:IBM) shares also retreated. Although the company surpassed overall expectations and raised its full-year guidance, citing tailwinds from Artificial Intelligence (AI), its software revenue growth disappointed investors.
Attention now shifts to the closing bell, where embattled chipmaker Intel (NASDAQ:INTC) is scheduled to report. The company is expected to post near break-even income for the third quarter, with weakness in its Data Center and AI division contributing to an anticipated small decline in sales. Intel has, however, recently benefited from significant capital injections, including from Nvidia (NASDAQ:NVDA) and SoftBank.
Discretionary Stocks and Airlines Move
The market saw varied movements across other sectors:
- American Airlines (NASDAQ:AAL) stock rose after the carrier reported better-than-expected third-quarter results, narrowing its losses.
- Honeywell (NASDAQ:HON) gained after the manufacturing conglomerate raised its 2025 profit forecast, signaling robust growth prospects driven by strong aerospace demand.
- In contrast, Hasbro (NASDAQ:HAS) stock fell as the toy manufacturer cited macroeconomic uncertainties impacting American shopper spending, even while raising its annual guidance.
- Moderna (NASDAQ:MRNA) slipped after its Phase 3 study for a cytomegalovirus (CMV) vaccine failed to meet its primary efficacy endpoint.
- Heavily-shorted Beyond Meat (NASDAQ:BYND) plummeted, reversing a massive gain of over 450% earlier in the week.
Geopolitical Risks Heat Up the Wire
Market sentiment was also weighed down by significant geopolitical developments.
US-China Trade Tensions Return
A Reuters report signaled that the Trump administration is considering sweeping restrictions on exports to China—specifically targeting goods made with or containing U.S. software. This move is reportedly in retaliation for Beijing’s latest curbs on rare earth exports and could impact a wide array of industries, including semiconductors, aerospace, and consumer electronics. The potential escalation in the trade war comes ahead of an expected meeting between President Donald Trump and Chinese President Xi Jinping, stoking investor concerns about a renewed trade conflict.
Oil Surges on New Russia Sanctions
Further complicating the global outlook, President Trump announced sanctions on Russia’s largest oil companies, Lukoil and Rosneft, citing Moscow’s “lack of serious commitment to a peace process to end the war in Ukraine.” This shift in U.S. policy immediately tightened the supply side of the oil market, easing concerns over a looming glut. As a result, Brent futures surged 5.4% to trade at $65.95 a barrel, and U.S. West Texas Intermediate (WTI) crude was 5.7% higher at $61.83 a barrel.
