[Detailed Analysis] U.S. Stock Market Surges as Investor Confidence Rises Before Tesla Earnings Report

# U.S. Markets Rebound Sharply Ahead of Tesla Earnings On the 22nd (local time), the U.S. stock market experienced a robust rebound, recovering from declines in the previous session as investors gravitated back to risk assets. The focus centered on Tesla's first-quarter earnings report, set for release after the market close, navigating through a blend of optimism and caution. The S&P 500 index increased by 1.7%, while the tech-focused Nasdaq 100 soared by 2.0%, marking a significant recovery. This bounce back came after substantial losses the prior day, spurred by former President Donald Trump's calls for Federal Reserve rate cuts and speculation about Jerome Powell's potential dismissal as Fed Chair. Despite the recovery, the CBOE Volatility Index (VIX) remained elevated at 31, indicating persistent market uncertainty. # Tesla Faces "Code Red" Warning Ahead of Earnings Tesla (TSLA) has seen its stock price drop nearly 42% year-to-date, impacted by CEO Elon Musk's political controversies and government-related activities, which have tarnished the company’s brand image. These issues have led to sluggish sales globally. Wedbush Securities highlighted Tesla's critical state by issuing a "code red" warning ahead of its earnings report, reflecting significant concerns. Morgan Stanley analyst Adam Jonas noted, "This quarter's results reflect the lowest margin expectations in the past 12 years." He added, "Key issues for investors encompass cash outflows, profitability lagging behind Volkswagen, and questions regarding Musk's leadership gaps." # Sector Insights: Boeing, Lockheed Rise; RTX, Northrop Decline In individual stock movements, Boeing (BA) saw gains following news of a partial divestiture of its digital aviation division. Lockheed Martin (LMT) also climbed, driven by stronger-than-expected revenue. Conversely, RTX Corporation (RTX) fell on concerns that former President Trump’s trade policies might hurt profitability. Northrop Grumman (NOC) shares also declined as the company lowered its outlook, citing rising production costs for its next-generation B-21 stealth bomber. # Trade Diplomacy: U.S.-India Progress, Japan Pushes Currency Talks On the geopolitical front, U.S. Vice President J.D. Vance announced significant progress in trade negotiations with India during his visit, a development that could impact future tariff policies on Indian imports. Meanwhile, Japan's Finance Minister Katsunobu Kato mentioned ongoing discussions with U.S. Treasury Secretary Scott Besant regarding foreign exchange-related matters. # Market Outlook: Second Half Rally Expectations Remain UBS indicated that U.S. equities might face near-term downside risk but maintained its forecast that the S&P 500 could rally to 5,300 points by year-end. In an optimistic scenario, where tariffs on Chinese imports are reduced by half, UBS projected the index might rise to 5,500. However, BCA Research’s Irene Tunkel issued a cautionary note, stating, "Most companies are likely to guide lower for the second quarter, leading to a wave of downward earnings revisions." She added, "Investors are increasingly focusing on forward guidance reflecting broader macroeconomic impacts, such as tariffs and the ongoing trade war, rather than short-term earnings beats." The market’s near-term trajectory remains uncertain, with mixed signals pointing to an environment of both opportunity and caution.