Tesla and Elon Musk will rock markets this week

After a ho-hum start to 2024, stocks took off on Thursday and Friday, with the S&P 500 finishing at an all-time high, two years after the last high, and record closes for the Dow and the Nasdaq-100.

To get repeat performances in the week ahead and the week after will be challenging. Equally challenging will be the week that follows.

One reason to expect challenges is that many indexes are giving off overbought signs already. By late December, the overbought signals were quite loud.

Tesla’s  (TSLA) – Get Free Report earnings Wednesday and the release of a key inflation measure on Friday are the key reports for this week.

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The week after that is even bigger with an important Federal Reserve meeting as well as earnings from Microsoft  (MSFT) – Get Free Report, Google-parent Alphabet  (GOOGL) – Get Free Report , Boeing  (BA) – Get Free Report, Apple  (AAPL) – Get Free Report and Amazon  (AMZN) – Get Free Report.

Let’s start with Tesla and Elon Musk.

Tesla has already said deliveries of new Teslas were up 38% in 2023 worldwide, and it has new vehicles coming into market, including the futuristic Cybertruck.

Sounds good, but Tesla’s outlook for 2024 will be the key to the report.

Analysts see earnings per share falling to 60 cents from $1.07 in the 2022 fourth quarter. The company has suggested 2024 results won’t be as robust as those in 2023.

Worries, in fact, have been creeping into the electric-vehicle universe. Buyers aren’t sold on them because of cost and reliability concerns, and they are worried about how far vehicles can be driven without charging.

On the other hand, they will buy anything hybrid. So auto dealers don’t want EVs on their lots.

Car-rental giant Hertz recently said it was selling 20,000 electric vehicles because of high repair costs they’ve seen.

Tesla rose 101.7% in 2023. However, all of the gain came in the first and second quarters. The shares fell (slightly) in the third and fourth quarters.

In the first two weeks of 2024, the shares are down 14.6%, the worst showing among the seven Magnificent Seven stocks. Next worst is Apple, down 0.5%. Nvidia  (NVDA) – Get Free Report is already up 20%. The group  include Alphabet, Amazon, Microsoft, Meta and Nvidia.

Tesla CEO Elon Musk unveils the Cybertruck. Image source: FREDERIC J. BROWN/AFP via Getty Images

The Elon Musk show 

But with Tesla, there’s always drama involving its brilliant but mercurial CEO.

This past week, after the Martin Luther King Jr. holiday, Musk said he needed to own 25% of Tesla. His goal: avoid takeovers and have enough control of the company as it develops robots and other artificial intelligence technology.

If his demands were not met, Musk said he would pursue unspecified ventures outside of Tesla.

Musk owns about 13% of the company now. He sold a substantial portion of his holdings to buy the social media site X (formerly Twitter).

How serious he is on the threat is not clear. But Ben Rose, whose Battle Road Research advises institutional investors, told The New York Times and news was “curious and ill-timed.”

The reality is Tesla faces increasing competition and difficult economic conditions.

But the pronouncement seemed par for the course. “You’re never really sure what you’re going to read from Elon Musk when you get back to the office after a three-day weekend,” Rose told The Times.

Other earnings reports due:

United Airlines Holdings  (UAL) – Get Free Report. Monday morning. Watch for its discussion about when its Boeing 737 Max 9 planes will return to service. The planes have been grounded since a hole blew off an Alaska Airlines flight on Jan. 12.

Due Tuesday: Netflix  (NFLX) – Get Free Report; General Electric  (GE) – Get Free Report; chipmaker Texas Instruments  (TXN) – Get Free Report; Homebuilder D.R. Horton  (DHI) – Get Free Report.

Due Wednesday: IBM  (IBM) – Get Free Report; telecom giant AT&T  (T) – Get Free Report.

Due Thursday: Credit-card processor Visa  (V) – Get Free Report; Comcast  (CMCSA) – Get Free Report; Union Pacific  (UNP) – Get Free Report; financial giant Blackstone  (BX) – Get Free Report.

Due Friday: Oil services giant Schlumberger  (SLB) – Get Free Report; Insurance giant Travelers  (TRV) – Get Free Report; money manager State Street  (STT) – Get Free Report.

Waiting on inflation and the Fed

The most important of the week’s economic reports comes Friday with The PCE report on Friday. It is part of a report on personal spending. Its importance is in how it measures inflation trends. The Fed wants to see inflation come down to 2% a year on a sustained basis. This report offers a clearer picture of the progress.

A good PCE report could push interest rates lower, ahead of the Fed meeting. That could give them room to start cutting rates. The hope has been was March and futures trading suggests that’s accurate. But don’t bet on it.

Fed Governor Christopher Waller opined at the Brookings Institution this past week that rates could be cut if the inflation is steady. He wouldn’t say when but most betting is in the second quarter or later.

Here’s what else to watch:

Leading Economic Indicators, due Monday from the Commerce Department. It’s one of the few government reports that tries to signal what is coming next.

Fourth-quarter gross domestic product. Due Thursday. The first draft of the fantastically complicated snapshot of economic activity at the end of 2023. It should show a resilient economy and declining inflation pressures. But it will not be complete and will be revised because more data are coming every day.

New-home sales. Due Thursday. This should show more activity than in in sales for existing homes. The first estimate on that activity showed the lowest sales in 13.5 years. A recovery may be on its way if mortgage rates decline and homeowner want to sell.