Tesla, Microsoft, Dow Futures, AT&T - 5 Things You Must Know Thursday

Wall Street weighs mixed earnings and the possibility of more government stimulus against rising U.S.-China tensions; Tesla posts fourth straight quarterly profit.
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Here are five things you must know for Thursday, July 23:

1. -- Stock Futures Rise as Wall Street Weighs Earnings, U.S.-China Tensions

Stock futures were higher Thursday as investors on Wall Street weighed mixed earnings reports and the possibility of more government stimulus against a rise in tensions between the U.S. and China.

Contracts linked to the Dow Jones Industrial Average were up 94 points, S&P 500 futures gained 11 points and Nasdaq futures rose 91 points.

Beijing called Washington's order to close its consulate in Houston an  “unprecedented escalation” by the U.S., and reports said Beijing was considering shutting the U.S. consulate in either Wuhan or Chengdu in retaliation.

The U.S. State Department said the closure of the Houston consulate was "to protect American intellectual property and Americans' private information."

“The escalation in U.S.-China tensions is a reminder of the headline risk faced by investors during the upcoming U.S. election campaign,” said Stephen Innes, AxiCorp's chief global market strategist. “The U.S. and China have become increasingly combative in their views this year. The markets better get used to it because there is more of that to come.”

Meanwhile, Senate Republicans have ironed out their differences with the White House on a fifth coronavirus relief package, The Wall Street Journal reported, and negotiations with Democrats will begin just days before a $600 weekly supplement to unemployment benefits expires on July 31.

Stocks closed higher Wednesday and the S&P 500 rose for the fourth consecutive session despite the escalation of tensions between the world's two largest economies.

2. -- Tesla Posts Fourth Straight Quarterly Profit

Tesla  (TSLA) - Get Report was rising 5.39% in premarket trading Thursday to $1,678.20 after the electric carmaker topped earnings and revenue estimates for the second quarter and said it could exceed 500,000 deliveries this year despite production disruptions from the coronavirus pandemic.

Tesla earned 50 cents a share on sales of $6.04 billion; adjusted earnings in the quarter were $2.18 a share. Analysts were expecting a loss of 82 cents a share on sales of $5.15 billion.

The second-quarter profit puts Tesla in the running for inclusion in the S&P 500 index, which requires four consecutive quarters of GAAP profit in addition to a handful of other baseline qualifications for a company to be considered, all of which Tesla has now met. 

Tesla earlier reported 90,650 vehicle deliveries in the second quarter, topping estimates by a wide margin. The carmaker held firm to its  previous delivery projections for the full year, saying it has "the capacity installed to exceed 500,000 vehicle deliveries this year, despite recent production interruptions."

Tesla also confirmed it was building a new Gigafactory in Texas, just outside of Austin.

3. -- Microsoft Beats Estimates on Demand for Cloud Software 

Microsoft  (MSFT) - Get Report traded lower in premarket trading even after posting better-than-expected fiscal fourth-quarter earnings on demand for its cloud-based software.

The Redmond, Washington-company reported earnings of $1.46 a share on a 13% increase in revenue to $38 billion. Analysts were expecting Microsoft to report earnings of $1.37 a share on revenue of $36.5 billion.

"We are the only company with an integrated, modern technology stack - powered by cloud and AI and underpinned by security and compliance - to help every organization transform and reimagine how they meet customer needs," said CEO Satya Nadella.

The company's cloud segment saw a 17% jump in fourth-quarter revenue to $13.4 billion, while its personal computing segment saw revenue jump 14% to $12.9 billion.

"Our commercial cloud surpassed $50 billion in annual revenue for the first time this year. And this quarter our commercial bookings were better than expected, growing 12% year over year,” said Amy Hood, executive vice president and chief financial officer. "As we drive growth across the company, we remain committed to investing in long-term strategic opportunities.”

Hood told analysts on a conference call that revenue in Microsoft's Intelligent Cloud division in the fiscal first quarter would come in at $12.55 billion to $12.8 billion, vs. Wall Street estimates of $12.6 billion.

The stock fell 2.24% to $207 in premarket trading.

4. -- AT&T, Intel and Twitter Report Earnings

AT&T  (T) - Get Report earned 83 cents a share on an adjusted basis in the second quarter on revenue of $40.95 billion, down 8.9% from a year earlier.

Twitter  (TWTR) - Get Report posted an adjusted quarterly loss of 16 cents a share - analysts expected breakeven. Daily average users of 186 million topped forecasts.

American Airlines  (AAL) - Get Report posted an adjusted second-quarter loss of $7.82 a share, narrower than estimates.

Intel  (INTC) - Get Report reports earnings after the closing bell Thursday.

The economic calendar Thursday includes weekly Jobless Claims at 8:30 a.m. ET. Economists expect another 1.3 million Americans filed for first-time unemployment benefits last week. More than 51 million have filed for benefits over the past 17 weeks.

5. -- Chipotle's Profit Falls 90%

Chipotle Mexican Grill  (CMG) - Get Report posted a 90% drop in second-quarter net income as indoor dining at restaurants has been prohibited during the coronavirus pandemic but adjusted earnings topped analysts' forecasts.

The burrito company earned 40 cents a share on an adjusted basis.

Revenue fell 4.8% in the quarter to $1.4 billion and same-store sales slumped 9.8%, though narrower than forecasts.

Digital sales soared 216% in the quarter and accounted for three-fifths of Chipotle's total sales.