Stock Market Today: Stocks Close Higher After GDP, Tesla Earnings

Stocks opened higher Thursday after data showed the U.S. economy remained strong in the final three months of 2023. However, the main indexes ran out of steam around midday, pressured by a negative earnings reaction for Magnificent 7 stock Tesla (TSLA). 

Ahead of the opening bell, the Bureau of Economic Analysis said gross domestic product (GDP) increased at a 3.3% annual rate in Q4, quicker than the 2.0% economists were expecting but slower than Q3's 4.9% spike. GDP growth for all of 2023 was 2.5%, more than 2022's 1.9% rise.

The data points to an economy that remained resilient even as the Federal Reserve hiked interest rates to a 22-year high in order to tame red-hot inflation. The next Fed meeting kicks off Tuesday, with the central bank widely expected to keep rates unchanged. 

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However, a string of economic reports recently has echoed today's data and lowered market assumptions for a March rate cut. Indeed, according to CME Group's FedWatch tool, futures traders are now pricing in a 49% chance the Fed will keep rates the same at its March meeting, up from 12% one month ago. The likelihood for a May rate cut is also now at 49%, up from last month's 12% probability.

Tesla stock spirals after earnings

In single-stock news, Tesla slumped 12.1% after the electric vehicle maker reported earnings. In the fourth quarter, TSLA disclosed earnings of 71 cents per share on $25.2 billion in revenue, while analysts were expecting earnings of 74 cents per share on $25.6 billion in sales. And while operating margin improved on a quarter-over-quarter basis to 8.2%, it was much lower than the 16% operating margin reported in the year-ago period.

Still, CFRA Research analyst Garrett Nelson kept a Buy rating on Tesla. While the analyst admits the earnings miss was "disappointing" and "uncharacteristic," the company's rumored plans to launch its mass market electric vehicle later this year "could be the catalyst the stock needs."

PARA pops on buzz the company could be taken private

Elsewhere, Paramount Global (PARA) – a member of Warren Buffett's Berkshire Hathaway equity portfolio – climbed 4.5% after media reports indicated the company is laying off employees. According to CNBC, Paramount CEO Bob Bakish wrote in a memo to employees that the Showtime parent's "priority is to drive earnings growth," and it will do so in part by operating "a leaner company." No details were given on how many job cuts there will be. 

The layoff news comes on the heels of Wednesday's headlines that Skydance Media, the production company founded by David Ellison, is considering taking Paramount private. Skydance is reportedly in talks to buy National Amusements, a holding company owned by the Redstone family that is the majority stakeholder in PARA.

As for the main indexes, the Dow Jones Industrial Average added 0.6% to 38,049, the S&P 500 gained 0.5% to 4,894, and the Nasdaq Composite rose 0.2% to 15,510.

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