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Stock market live Wednesday: Tesla profit beats, Microsoft falls, Dow gains 165

U.S. markets rose on Wednesday as investors digested more positive news about the search for a Covid-19 vaccine. Prices of gold and silver also moved higher.

Wednesday's market by the numbers

  • The Nasdaq Composite gained 0.24% for its third positive day in four
  • The Dow gained 0.62% for its third straight positive day with McDonald's and Microsoft having the most positive point impact
  • The S&P 500 closed up 0.57% for its fourth straight positive day and its sixth positive day in seven
  • Russell 2,000 small caps gained 0.18% for its third positive day in four
  • Nine out of 11 S&P 500 sectors were positive, led by utilities. - Gina Francolla

Tesla pops 6% after earnings sail past expectations and open S&P 500 possibility

Tesla posted adjusted profits results Wednesday afternoon well ahead of expectations. Excluding one-time charges, Tesla's second-quarter earnings per share of $2.18 were well above the 3 cents per share expected by analysts polled by Refinitiv. The company also reported GAAP net income for the fourth consecutive quarter, a key achievement that opens the door for S&P Dow Jones to include the stock in the S&P 500.

The electric car maker said in its earnings presentation that the progress it's made in 2020 has "positioned us for a successful second half." Tesla also reiterated its goal of delivering 500,000 vehicles this year. — Thomas Franck

Chipotle digital sales triple in the second quarter, but restaurant closures weigh

Shares of Chipotle Mexican Grill dipped more than 1% in extended trading after the restaurant chain reported second quarter earnings that were down 90% as locations remained closed during the pandemic. The company posted an adjusted profit of 40 cents per share, which was 5 cents ahead of Street estimates, according to Refinitiv. Revenue came in at $1.36 billion, which was slightly ahead of the expected $1.34 billion. Digital orders increased by 216% and accounted for 60.7% of sales. - Amelia Lucas, Pippa Stevens

Las Vegas Sands falls after reporting under $100 million of revenue

Shares of casino company Las Vegas Sands fell 1.4% in extended trading after the company missed Wall Street estimates for its top and bottom lines for the second quarter. The company reported a loss of $1.05 per share on $98 million of revenue. Analysts surveyed by Refinitiv projected a loss of 74 cents per share and $564 million of revenue. The estimates had a wider-than-typical range. Casino stocks have been hit hard by the coronavirus pandemic, which has brought global travel to a standstill. Las Vegas Sands said it had $3.02 billion of unrestricted cash on its balance sheet and access to another $3.9 billion through credit facilities. — Jesse Pound

Microsoft stock dips 2.5% in after-hours trading despite better-than-expected profits

Shares of Microsoft dipped 2% in after-hours trading Wednesday evening after the software giant reported fiscal fourth-quarter earnings and revenues that surpassed analysts' expectations. Microsoft reported a profit of $1.46 per share on sales of $38.03 billion. Analysts had expected earnings per share of $1.34 and revenues of $36.5 billion, according to Refinitiv.

CEO Satya Nadella said in a press release accompanying the results that "the last five months have made it clear that tech intensity is the key to business resilience. Organizations that build their own digital capability will recover faster and emerge from this crisis stronger."

Microsoft said its commercial cloud unit surpassed $50 billion in annual revenues for the first time as customers continued to work and learn from home amid the Covid-19 pandemic.

The company also said transactional license purchasing continued to slow, particularly in small and medium businesses, and LinkedIn was negatively impacted by the weak job market and reductions in advertising spend.— Thomas Franck

Whirlpool jumps in extended trading after big earnings beat

Shares of Whirlpool jumped more than 8% after the company beat second quarter estimates by a large margin. The company reported an adjusted profit of $2.15 per share for the quarter, compared with the $1.00 profit analysts surveyed by Refinitiv were expecting. Revenue also topped expectations, coming in at $4.04 billion versus the expected $3.57 billion. The company also raised its full-year revenue outlook. - Pippa Stevens  

Stocks close near session highs, Dow jumps more than 150 points

Stocks closed around their highest levels of the day following news that the GOP is considering extending unemployment benefits at a reduced rate. The Dow advanced 165 points for a gain of 0.62%, while the S&P 500 closed 0.58% higher. The tech-heavy Nasdaq Composite was the relative underperformer, gaining 0.24%. Optimism over a potential Covid-19 vaccine developed by Pfizer and Germany-based BioNTech also fueled investor optimism. - Pippa Stevens 

Benchmark Treasury yield under 0.60% for first time since April

As stocks rose this month, so did bonds, and the yield on the 10-year is back below 0.60% for the first time since April 22.

John Briggs, head of strategy at NatWest Markets, said there has been strong buying interest all month, and the 10-year has lost about 9 basis points since early July to 0.58% Wednesday. Bond yields fall as prices rise.

"It's just relentless. It's like a half point a day no matter what the news is," he said. "There's just strong demand. Domestic banks have had their largest consecutive increase in Treasurys [holdings] since the 1970s."

Briggs said banks bought $205 billion in Treasurys since mid-May, the largest consecutive boost to their holdings since 1973. But others are buying too. Typically when bond yields fall and buyers run into bonds, it's because there are worries about the economy or something else. Since early July, the spread of coronavirus has picked up dramatically, yet the S&P 500 is up more than 5%.

"Either the bond guys are just depressed or there's nothing to spark an up move, and we just see buying," Briggs said. -- Patti Domm

Stocks rise to highs of the day on stimulus extension talks

Stocks jumped to their highest levels of the day in the final hour of trading following news that Republicans are considering extending stimulus benefits at a reduced level. The current $600 per week jobless benefit boost, which was implemented in March, is set to expire at the end of July. Talks are ongoing, but the GOP is currently discussing extending the benefit at a reduced rate of $400 per month for the rest of the year. - Kayla Tausche, Jacob Pramuk

Final hour of trading: Dow and S&P 500 head for slight gains, Nasdaq falls

The Dow and S&P 500 were on pace to record slight gains after Pfizer and BioNTech landed a $2 billion government deal for their coronavirus vaccine. The 30-stock Dow traded 0.3% higher along with the S&P 500. The Nasdaq Composite struggled, falling 0.1%. A decline in bank shares weighed on the major averages. —Fred Imbert

Bank stocks struggle

Bank stocks fell in afternoon trading, limiting the Dow and S&P 500 to modest gains. Shares of Goldman Sachs and Morgan Stanley fell 3% and 2.3%, respectively, while JPMorgan lost 1.6%. Last week, major banks reported quarterly results that largely beat expectations, thanks in part to strong performances from their trading units. Investors have not rewarded the stocks however, with the SPDR S&P Bank ETF losing ground so far in July.  — Jesse Pound

NYSE advancers and decliners about even as market struggles for direction

The number of advancing stocks at the New York Stock Exchange was roughly the same as declining issues as the broader market traded in a narrow range. FactSet data showed that 1,547 NYSE-listed stocks traded higher while 1,317 declined. —Fred Imbert

Wall Street analysts cautious going into Tesla's earnings report

Tesla reports its second-quarter earnings on Wednesday after the bell and Wall Street analysts say the pressure is on for Tesla to deliver.If the company delivers its fourth straight quarter of profits, the company would be eligible for inclusion in to the S&P 500. However, many analysts are urging clients to be cautious and believe the stock is overvalued. "Expectations have risen into the quarter, but regardless we think the Tesla 2020 earnings story still hinges more on H2 execution/outcomes," Citi said.  Shares are up over 5% this week.

 Pro subscribers can read more here. — Michael Bloom

Nike announces job cuts, leadership reshuffle

Nike said Wednesday that it is shaking up its leadership ranks and cutting some jobs as the retailer refocuses its business on digital sales in the wake of the coronavirus pandemic. Nike did not disclose how many jobs will be lost.

"We are announcing changes today to transform Nike faster, accelerate against our biggest growth opportunities and extend our leadership position," Nike President and Chief Executive Officer John Donahoe said in a statement. "Now is the right time to build on Nike's strengths and elevate a group of experienced, talented leaders who can help drive the next phase of our growth." 

Shares of Nike were flat around midday trading. - Lauren Thomas, Pippa Stevens 

Midday movers

FirstEnergy — Shares of FirstEnergy plunged more than 24%, extending a steep sell-off from Tuesday, after the energy company was embroiled in a corruption investigation in Ohio. The company said that it has received subpoenas as part of the investigation.

Best Buy — Shares of the electronics retailer surged nearly 8% after the company said its online sales jumped more than three-fold in the current quarter through July 18.

iRobot – Shares of iRobot dropped more than 6% after the automatic vacuum maker posted big earnings beat. The company also raised its revenue forecast due to a surge in demand amid the pandemic.

Check out more companies making headlines in midday trading.  Yun Li

Markets at midday: Stocks rise slightly, Pfizer leads

The major averages were up sliglty around midday amid optimism around a coronavirus vaccine candidate from Pfizer and its German partner BioNTech. The Dow climbed 85 points, or 0.3%. The S&P 500 gained 0.2% and the Nasdaq Composite advanced 0.1%. —Fred Imbert

'Market concentration' is not a big deal this time, says Credit Suisse

Jonathan Golub, chief U.S. equity strategist at Credit Suisse, thinks investors shouldn't worry too much about the outperformance of Big Tech relative to the market. "There's lots to worry about these days including an increase in COVID-19 cases, a strained relationship with the world's #2 economy, ballooning deficits and the potential for higher taxes," said Golub. "Fortunately, you can cross market concentration off your list of things to fret about." —Fred Imbert

CNBC Pro subscribers can read more here.

Ackman's new SPAC fund jumps in debut

Shares of Pershing Square Tontine Holdings, Bill Ackman's new SPAC fund, jumped 7% when they began trading on Wednesday. Also known as blank-check companies, SPACs raise money in an IPO and then hold the cash until finding an acquisition target. Ackman's new SPAC is the largest on record after raising $4 billion in outside capital. Pershing Square will contribute an additional $1 billion to $3 billion, meaning the total size could reach $7 billion. - Pippa Stevens

Homebuilder stocks jump after record home sales increase

Sales of existing homes jumped nearly 21% in June, marking the largest monthly gain on record, according to the National Association of Realtors. The jump came after sharp declines over the previous three months due to the coronavirus pandemic. Sales were still 11.3% lower annually. The iShares U.S. Home Construction ETF (ITB) gained 3.4% on Wednesday, on pace for its best day in a week. Leaders in the ETF included NVR and M/I Homes, which were both up almost 8%. KB Home and Toll Brothers also popped 6% each.  — Yun Li, Gina Francolla

Silver ETF spikes as safe-haven demand grows

The iShares Silver Trust ETF (SLV) jumped 5% as investors continue to hedge positions through safe-haven assets like precious metals. The ETF hit its highest level since March 2014 and has already traded 19 million shares, nearly two-thirds its 30-day average volume. —Fred Imbert, Gina Francolla

Here are Wednesday's biggest analyst calls of the day: Tesla, Coca-Cola, Macy's, Snap & more

  • Guggenheim downgraded Snap to neutral from buy.
  • Atlantic Equities upgraded JPMorgan to overweight from neutral.
  • UBS downgraded Macy's and Kohl's to sell from neutral.
  • UBS initiated Canada Goose and Deckers as buy.
  • Citi added a catalyst call buy on Allstate.
  • Morgan Stanley upgraded Coca -Cola to overweight from equal weight.
  • Morgan Stanley downgraded Colgate-Palmolive to equal weight from overweight.
  • Bank of America raised its price target on Tesla to $800 from $500.

Pro Subscribers can read more here: —Michael Bloom

Pershing Square's Bill Ackman calls new investment vehicle 'most investor friendly SPAC in the world'

Bill Ackman's Pershing Square Tontine Holdings is set to become the largest special purpose acquisition company, or SPAC, on record when it begins trading later on Wednesday.

The founder of Pershing Square Capital Management said that it's the "most friendly SPAC in the world" due to its compensation structure.

"What's new in our structure is that we're taking no compensation: no management fees, incentive fees ... we're not buying cheap stock. There's literally no compensation to the sponsors," Acman said Wednesday on CNBC's "Squawk Box." - Pippa Stevens 

Stocks dip as U.S.-China tensions rise

The Dow opened 35 points lower, or 0.1%, as traders grappled with rising U.S.-China tensions as well as a coronavirus vaccine deal between the U.S. government, Pfizer and its German partner BioNTech. The S&P 500 dipped 0.06%. The Nasdaq bucked the trend, rising 0.07% ahead of Microsoft and Tesla earnings. —Fred Imbert

Bill Ackman says he's 'long-term bullish on America'

Billionaire investor Bill Ackman told CNBC's "Squawk Box" on Wednesday he is bullish on the long-term prospects of the U.S. However, he thinks companies with high levels of debt will struggle to survive in this environment. "We are long-term bullish on America; We are long-term bullish on the markets," said Ackman, the founder of Pershing Square Capital Management. ""But I would say I'm cautious on markets over the next period of time. We have today a short position in a high-yield index. We are bearish on highly-levered companies." —Fred Imbert, Yun Li

Snap shares down 6% after reporting a big net loss

Shares of Snap dropped more than 6% in premarket trading on Wednesday after the social media platform reported a net loss of $326 million in the second quarter, which is up nearly 28% from a $255 million loss last year. Snap blamed the higher losses on long-term investments to "to build on the momentum we have established with our community, and our advertising partners." Meanwhile, its loss per share came in at 9 cents, in line with Refinitiv estimates.  Yun Li

Tesla, Microsoft set for afternoon earnings reports

Two high-flying tech companies will report their quarterly results after the bell today. Shares of Microsoft and Tesla gained about 1% in premarket trading ahead of the final session before their reports. The quarterly results are particularly important for Tesla, as a positive GAAP-earnings number could help it gain a slot in the S&P 500. — Jesse Pound

Weekly mortgage demand jumps

Mortgage applications jumped 4.1% last week, according to data from the Mortgage Bankers Association, as mortgage rates hover near a record low. Low rates are adding to already strong buyer demand. Mortgage applications for home buyers rose 2% for the week — the ninth straight week of annual gains — and are 19% higher year over yer. - Diana Olick, Pippa Stevens 

Government announces $1.95 billion deal for Pfizer to manufacture vaccine

Shares of Pfizer jumped more than 4% in premarket trading after the Department of Health and Human Services announced that it tapped the company to 100 million doses of its Covid-19 vaccine candidate if it proves effective. The vaccine candidate is being developed with German company BioNTech. The deal is part of the government's Operation Warp Speed and would pay Pfizer $1.95 billion.  — Jesse Pound, Will Feuer

Dow futures dip amid rising U.S.-China tensions

Investor sentiment took a hit amid signs that the relationship between the U.S. and China is deteriorating further. Futures on the Dow Jones Industrial Average dipped about 50 points, pointing to a slightly lower open. Futures extended losses after the U.S. State Department abruptly ordered China to close its consulate in Houston. The S&P 500 futures last traded neat the flat line, while the Nasdaq 100 futures gained 0.2% after a steep sell-off in technology shares in the previous session. Investors also await key corporate earnings on Wednesday after the bell, including Microsoft and Tesla. – Yun Li