US stocks rally as Tesla set to kick off earnings for Magnificent Seven

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US stocks rally as Tesla set to kick off earnings for Magnificent Seven U.S. stocks rallied Tuesday, underpinned by mostly better-than-expected quarterly earnings just ahead of the start of earnings from the Magnificent 7, with Tesla set to report after the close.

AT 13:52ET (17:52 GMT), Dow Jones Industrial Average rose 304 points, or 0.8%, S&P 500 gained 1.3%, and NASDAQ Composite rose 1.7%.

Tesla kicks off tech earnings parade 

Electric vehicle maker Tesla (NASDAQ: TSLA ) set kickoff earnings for the 'Magnificent Seven' with a quarterly earnings after the bell.

The EV maker's stock has tumbled in recent weeks amid concerns about an EV recession that sparked a price war across in the industry. But Tesla is expected to try "to shift the narrative to the future: FSD, robotax," UBS said, though noted that clarity on whether the company still plans to launch a cheaper EV, or Model 2, is key. 

Including Tesla, four of the “Magnificent 7” stocks are set to report earnings this week. Facebook owner Meta Platforms (NASDAQ: META ) will report earnings on Wednesday, followed by Microsoft Corporation (NASDAQ: MSFT ) and Google-owner Alphabet (NASDAQ: GOOGL ) on Thursday. 

Markets will be waiting to see whether the country’s biggest companies can justify a solid melt-up in their valuations through the first quarter. 

General Motors jumps on upbeat forecast; GE Aerospace, Spotify shines on earnings stage 

Ahead of that, General Motors (NYSE: GM ) stock rose over 5% after the auto giant raised its annual forecast after strong quarterly results, while GE Aerospace jumped 6.7% after the aerospace giant raised its full-year profit forecast.

"From a guidance perspective, GM is continuing to deliver on its initial goals while raising bottom line guidance and providing more color on the year," Wedbush said in a note as it maintained its outperform rating on the stock.

Spotify (NYSE: SPOT ) gained nearly 16% after the Swedish music streaming company beat estimates for premium subscribers.

Novartis (NYSE: NVS ) stock rose 2% after the Swiss drugmaker raised its full-year guidance following the release of better-than-expected first-quarter results earlier Tuesday.

Jetblue stumbles on guidance cut; Pepsi misses

On the flipside, JetBlue (NASDAQ: JBLU ) plunged over 16% as the low-cost airline trimmed its annual revenue forecast after reporting lukewarm first-quarter revenue.

PepsiCo (NASDAQ: PEP ) fell 2.2% after the soft drinks behemoth witnessed a slowdown in the United States.

“With only 70 or 14% of the firms in the S&P 500 index having reported [before today] it’s still too early to make any definitive statements about the season so far," said analysts at Oppenheimer, in a note. "That said, earnings so far are up 9.4% from a year earlier on 4.5% revenue growth; and 80% of firms that have reported so far have beaten expectations."

Treasury yields slip on weaker U.S. economic data

Treasury yields fell from the recent highs as data showing manufacturing and services activity unexpectedly weaken in April. 

The data come ahead of gross domestic product   and the  PCE price index data - the Fed’s preferred inflation gauge - due Friday, which is set to offer more cues on interest rates.

"According to the futures market, investors now see less than two rate cuts priced in by the end of the year," Stifel said in a note.

(Peter Nurse, Ambar Warrick contributed to this article.)

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