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Tesla Plunges, and General Electric Sells Business Unit for $265 million

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is finding a little strength for the first time this week, trading more than 100 points higher as of 2:45 p.m. EST. The Conference Board reported a 0.7% increase in its index of leading economic indicators for September. That was just slightly ahead of the 0.6% estimate, but any positive development is music to investors' ears as uncertainty still surrounds consumers ahead of the holiday season. With that and the continuing earnings season in mind, here are some of the movers in the market today.

Inside the Dow, General Electric (NYSE: GE  )  is a big winner on the day, trading 2% higher. General Electric has spent the last couple of years refocusing on its industrial portfolio, and investors have cheered the move. The result is that the industrial portfolio is as strong as it's been in a long time. In a smaller move, but toward the same goal, General Electric's power and water division agreed to sell its air filtration operation to Clarcor for about $265 million; GE purchased the business in 2004 for $260 million.

The business was a leading supplier of air filtration systems for industrial applications and produced annual revenue of about $230 million. The multiyear agreement calls for the business to continue producing products for General Electric, which has the world's largest base of natural-gas turbines.

Outside of the Dow, the automotive industry continues to unleash its earnings results. Tesla Motors  (NASDAQ: TSLA  ) shares have been on a tear this year, but they plunged more than 14% today after its latest results, which beat estimates, couldn't sustain its yearlong rally.

TSLA Chart

TSLA data by YCharts.

Tesla's Model S has been a hit with luxury consumers. Photo Credit: Tesla

Tesla actually outperformed non-GAAP revenue and earnings-per-share estimates by posting revenue of $603 million and earnings of $0.12 per share. Moreover, Tesla was free-cash-flow positive for the third quarter, while vehicle sales were up sequentially with more than 5,500 deliveries. Tesla's goal of having 25% non-GAAP automotive gross profit margin, excluding zero-emission vehicle credits, by the fourth quarter is still reachable, as the company posted 21% gross margins in the third quarter. Ultimately, Tesla's stock was priced for perfection, and analysts apparently wanted to see excellent results -- which it delivered -- in addition to improved guidance for more vehicle production -- which it didn't.

Tesla wasn't the only automaker to post strong financial results this week: Toyota (NYSE: TM  ) also swung for the fences with its fiscal 2014 second quarter.

Toyota's second-quarter earnings showed quarterly profits surging by 70% on recent weakness in its yen currency. Toyota is the most export-reliant of Japan's major automakers, and as money made abroad is converted back to yen, it juices profits. For Toyota's first two quarters of fiscal 2014, operating income surged from 693.7 billion yen to 1.25 trillion yen. Net income also surged from 548.2 billion yen to 1 trillion yen.

Toyota executive vice president Nobuyori Kodaira commented on the results in a press release: "In addition to the impact of the weaker yen, operating income increased due to our efforts with our suppliers and distributors for profit improvement through cost reduction and marketing activities, such as enhancement of the model mix."

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Related Tickers

9/30/2016 5:01 PM
^DJI $18308.15 Up +164.70 +0.91%
GE $29.62 Up +0.09 +0.30%
General Electric CAPS Rating: ****
TM $116.06 Up +0.07 +0.06%
Toyota Motor CAPS Rating: ***
TSLA $204.03 Up +3.33 +1.66%
Tesla Motors CAPS Rating: **