Wall St set for flat open; Tesla slumps as deliveries disappoint

Summary:

• US indices little changed ahead of the cash open

• Initial jobless beats forecasts; Nothing big from ECB minutes

• Boeing and Tesla in focus

The roaring rally which has greeted the new month seems to have taken a bit of a pause so far today with the US benchmarks trading little changed ahead of the cash session. Wednesday saw all three large cap indices hit their highest level of the year and they now trade just a couple of percent from their record peaks. There’s not too much by the way of data out this afternoon, with initial jobless claims the only real release of note. The weekly unemployment indicator came in below expectations for the 3rd week in a row, with the latest print being 202k. This strength may perk up hopes ahead of tomorrow’s NFP report, which has a little sense of concern heading into it with a disastrous miss last time out and soft ADP yesterday (Read or NFP preview here)   

There’s been a divergence opening up between the S&P500 and the Small-cap index of late, with the latter clearly underperforming in the past month. Source: xStation

While not US based, the ECB can impact stocks across the Atlantic and so it’s worth noting the minutes from the central banks latest release. Overall, the ECB said that the baseline view was for solid growth to return later this year which seems optimistic to say the least given the recent deterioration in data. Further selected statements are as follows:

•  Growth returning to potential through projection horizon might be optimistic

• Risk of inflation expectations de-anchoring seen as low

• Economy is in extended soft patch, length is still unclear

• Uncertainty has elevated, citing trade tensions

• Growth slowdown could weigh on the pass-through from wages to prices

• Some members argued for guidance to stipulate steady rates through Q1 2020 instead

Boeing in focus as crash report released

The preliminary report into the Ethiopian Airlines plane crash last month has drawn more unwanted attention onto Boeing and its 737 Max models as it revealed the aircraft nosedived several times before ultimately crashing. The first official report into the disaster revealed that pilots “were not able to control the aircraft” as software that is designed to prevent stalling by pushing the nose down wasn’t able to be manually overridden. Shares in Boeing have come under pressure since the crash, which was the second in 5 months involving this model of plan, and while the blame isn’t solely at the door of the airline it does appear to raise questions about who is responsible for pilot training after crucial software updates are carried out. There’s not been any notable reaction in Boeing’s stock to this news in the pre-market with shares called to open roughly inline with where they ended last night.       

Boeing shares are expected to begin around where they ended last night with the stock still under pressure after the Ethiopian airlines crash. Source: xStation

Tesla set to open sharply lower after deliveries fall short

Investors in Tesla may be dreading the opening bell on Wall Street this afternoon, with the stock called to open lower by as much as 7% after the electric automaker revealed a big hit to vehicle deliveries in the first quarter. The drop of more than 30% is significantly worse than even the most pessimistic of analyst forecasts and comes at a time when the firm is aiming to ramp up production. The results could have been even worse for Tesla with only half of total deliveries for the quarter completed with just 10 days to go, but even with the late push final figures of 63,000 are well below the 90,700 seen in Q4 2018. The company still believe they can make up the shortfall, with a bounceback in the next quarter and they have reaffirmed their year-end guidance of 360,000-400,000 total deliveries. Orders for the models continue to be strong but the company is clearly struggling with the logistics of meeting this demand and that is worrisome for investors who will be growing concerned that the first mover advantage is being slowly eroded as competitors ramp-up their operations in the electric vehicle space. Shares are expected to begin around $270 this afternoon, with the price drifting back towards the lower reaches of the $240-390 range that has defined it for the past 2 ½ years.    

Shares in Tesla are called to open lower by as much as 7% around the 270 mark this afternoon. The stock is drifting back towards the lower reaches of its 2 ½ year range. Source: xStation