Before the Bell: Tesla Cuts US Prices, Big Banks Reporting Q4 Earnings

Premarket action Friday had the three major U.S. indexes trading lower. The Dow Jones industrials were down 0.13%, the S&P 500 down 0.27% and the Nasdaq is 0.48% lower.

Eight of 11 market sectors closed higher Thursday, with energy (1.87%) and real estate (1.06%) leading the gainers. Consumer staples (−0.79%) and utilities (−0.64%) posted the day’s worst losses. The Dow closed up 0.64%, the S&P 500 up 0.34% and the Nasdaq up 0.64%.

Trading volume was up slightly Thursday. New York Stock Exchange winners led losers by 2,372 to 746, while Nasdaq advancers led decliners by more than 2 to 1. Among S&P 500 stocks, American Airlines Group Inc. (NASDAQ: AAL) added 9.7% after raising fourth-quarter guidance. Charles River Laboratories International Inc. (NYSE: CRL) and Illumina Inc. (NASDAQ: ILMN) lost 6% and 5%, leading health care to its position as Thursday’s other sector loser, down 0.39%.

The latest consumer price index report reinforced sentiment among investors and traders that the Federal Reserve would take a break from its string of interest rate hikes. Since posting a January low a week ago, the Dow is up 2.8%, the S&P 500 up 3.4% and the Nasdaq up 5.2%. The preliminary reading of the University of Michigan Consumer Sentiment will be released after markets open on Friday. Economists are forecasting a slight increase for the month, from 59.7 in December to 60.5.

Over the past five trading days, shares of Tesla Inc. (NASDAQ: TSLA) have risen by almost 12%. After the disaster that was 2022, the bulls were running again. It was too good to last, though. Shares traded down 4.5% in Friday’s premarket after the company announced price cuts of up to 20% on all its vehicles in both the United States and Europe.

In the United States, all Model 3 and all but one Model Y versions now have prices low enough to qualify for the $7,500 federal tax credit that went into effect on January 1. A standard range Model 3 with the price cut and tax credit will cost about $36,500, while a Model 3 performance version will cost about $46,500 and the Model Y long-range version will cost about $45,500. Only the Model Y performance version will fail to qualify for the tax credit. But an 18.6% price reduction lowers the starting price from nearly $70,000 to almost $57,000. The price drop, including the federal tax credit, on the Model Y long range version is 31.1%.

Tesla bull Gary Black, managing partner of investment management firm The Future Fund, tweeted late Thursday night that he received an email from a Tesla sales rep that suggests Tesla may keep the discounts in place only through March, after which the price may go back up if the IRS revises the price caps for the federal incentive upward to $80,000.

This came via email from a Tesla sales rep tonight. Interesting $TSLA is just committing eligibility of EV incentives through March 31. Does that mean prices could go back up if IRS revises TSLA M-Y price caps upward to $80K? @elonmusk pic.twitter.com/em2vpYReca

— Gary Black (@garyblack00) January 13, 2023

Before markets open on Friday, five of the country’s largest banks are reporting December-quarter results: Bank of America, BNY Mellon, Citigroup, JPMorgan and Wells Fargo. To add even more caffeine to your morning coffee, BlackRock, Delta Air Lines and United HealthCare are also expected to post results.

Check back later in the morning for our wrap-up of Friday’s early earnings reports and a preview of earnings due out next Tuesday from Goldman Sachs, Morgan Stanley and Silvergate Capital. U.S. markets are closed Monday in observance of the Rev. Martin Luther King Jr. holiday.

Originally published at 24/7 Wall St.

By Paul Ausick