Market Wrap- Top Stocks: Tesla, Intuitive Surgical

The earnings season has sent the market into a scramble. Strong reports from major banks last week sent the market soaring, followed by Tuesday’s estimate miss from Netflix and electric-vehicle numbers from Tesla after the market close, which had all four US indices slipping on Wednesday.

• The S&P 500 slipped 0.5%, held mainly by the immense gain in Intuitive Surgical’s stock.
• The tech-heavy Nasdaq Composite was down 0.9%, ahead of the earnings release from EV giant Tesla, which also marks the start of reports from the Magnificent Seven.
• The Dow Jones Industrial Average slipped 0.8%, with several prominent names, including Apple, Goldman Sachs, Amazon, and Salesforce, falling.
• The small-cap Russell 2000 suffered significantly, closing down 1.5%.

It's not just the earnings or the preview that had the market stirring on Wednesday.  Following a Reuters report stating that the White House is considering a plan to restrict exports of a wide range of products to China, the indices fell even lower, increasing uncertainty.

Gold prices continued to edge lower, declining intraday before gaining 0.4% near the close. The U.S. 10-year Treasury yield remained below the 4% mark, but oil prices gained around 4% on Wednesday.

Tesla's stock was down 0.8% at the close, ahead of anticipated Q3 earnings, and continued to slide after the closing bell, down 3.8% at last check. Intuitive Surgical’s stock was up 13.8%, credited to its second consecutive positive earnings report.

Tomorrow, we can look forward to reports from Intel, Honeywell, T-Mobile, and Blackstone, among others.

Here are the most active stocks today

Five S&P 500 stocks making big moves today are:

• Intuitive Surgical: +13.9%
• Avery Dennison: +9.5%
• Halliburton Co: +4.2%
• SLB: +4.1%
• Boston Scientific Corp: +3.9%

The worst-performing five S&P 500 stocks today are:

• Lennox International: -10.2%
• Netflix Inc: -10.1%
• Quanta Services Inc:  -5.8%
• On Semiconductor Corp:  -5.7%
• Texas Instruments:  -5.6%

Stocks also worth noting include:

• Nvidia :  -0.5%
• Micron :  -1.9%
• AMD: -3.3%
• Plug Power:  -6.4%
• Palantir: -3.3%.

Are earnings a success or a miss for Tesla?

Tesla shares, which were in focus on Wednesday before the earnings release, dropped 0.8% intraday and were down nearly 4% after closing.

However, the EV maker reported a profitable quarter, with $28.1 billion in total revenue, marking a 12% year-over-year increase. While it reported a fresh cash flow of nearly $4 billion, its operating margins slipped to 5.8% due to a 40% year-over-year decrease in operating income to $1.6 billion.

More Tesla:

• Tesla shareholders respond to latest push against Elon Musk
• Tesla’s surprising delivery data hide a serious problem
• Tesla Q3 report needs to show a clear future

It cited higher operating expenses, investments in AI initiatives, R&D, and a one-time reduction in fully self-driving revenue recognition as primary reasons for the decrease in operating income.

While the company highlighted growth in its energy and AI-driven businesses, it also flagged “near-term uncertainty from shifting trade, tariff and fiscal policy,” and a focus on “long-term growth and value creation,” in the shareholder’s note.

Last week, Melium Research analyst Rob Wertheimer initiated coverage of Tesla with a Buy rating and a $520 price target because of confidence in Tesla’s ability to deliver on its potential success in autonomous vehicles.

Related: Tesla earnings can't hide this big EV industry issue

However, BNP Paribas Exane analyst James Picariello was bearish on the EV stock and had an Underperform rating with a $307 target price for Tesla, arguing that autonomous ventures remain speculative.

Barclays raised its price target to $350 from $275, maintaining an Equal Weight rating, suggesting that Tesla will enter Q3 earnings with two “contrasting” stories, marked by an ambitious AI narrative and a weakening fundamental backdrop, as reported at TheFly.

High-end surgical instruments resilient

Intuitive Surgical, manufacturer of the da Vinci and Ion endoluminal system, emerged as a top performer on Wednesday, trading 13.9% higher.

Specializing in robot-assisted surgery, the company's stock has gained 20% over the past week, driven by robust earnings.

Related: Stock Market Today: Tesla and IBM Tumble After Earnings; Moderna Trial Misses

Intuitive Surgical topped Wall Street expectations in a second straight quarter of more than 20% revenue and earnings per share growth, signaling rising healthcare capital spending and investment in high-cost productivity-enhancing technologies.

Analysts are mostly optimistic about its future growth, with RBC Capital raising its price target to $625 from % $615, maintaining an Outperform rating. 

And Mizuho analyst Anthony Petrone raised the price target to $575 from $520, while maintaining a Neutral rating, citing that while the company can maintain its “bellwether” growth, its growth is already priced into the shares, as reported by TheFly.

Meanwhile, Baird’s increase to $655 from $536, with an Outperform rating, on the beat and raise in Q3 bucks the bear thesis overhang.

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