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Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of more than 15,000 subscribers striving to be better investors with an edge in the market.

Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

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Market Talk

The market is higher to start the week, with the major indexes bouncing after a tough two few weeks.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

Tesla shares jump after Musk says company aims to start production of affordable new EV by early 2025

Tesla shares are up significantly today despite reporting a 9% decrease in revenue for the first quarter, the largest drop since 2012, due to several challenges.

Despite this, the stock rose after the report as CEO Elon Musk hinted at earlier-than-expected production of new affordable electric vehicle models, potentially starting in late 2024 or early 2025. Musk also discussed Tesla's investments in artificial intelligence and plans to license its driver assistance system to a major automaker.

In its shareholder deck, the company shared that it aims to launch new vehicles, including more affordable models, utilizing existing manufacturing lines to achieve over 50% growth in production compared to 2023 before investing in new manufacturing capacity. Tesla also showcased screens of a robotaxi-based ride-hailing service in the deck.

Despite the attempt of a positive spin, Tesla reiterated a cautious outlook for 2024, expecting lower volume growth compared to 2023.

Tesla's shares had declined over 40% in 2024 prior to this announcement due to concerns about weak deliveries, competition in China, and ongoing price reductions.

We covered these concerns and shared our price targets for Tesla in our most recent Deep Dive.

A majority of S&P 500 companies are exceeding earnings expectations, why is the market falling?

Currently, about 75% of S&P 500 companies reporting first-quarter results have exceeded earnings expectations.

However, there have been several challenges and markets haven't seemed to fully adjust the risk/reward ratio going forward despite the positive earnings data.

At The Investor’s Edge, we anticipate the trend of companies meeting or slightly surpassing expectations to continue this quarter, but believe future expectations may need to be moderated, especially in the growth sector, as the year progresses and comparisons become more challenging.

Since markets are forward-looking, the future guidance determines how markets react to these earnings releases. Investors are looking for better outlooks than previously reported but with most of the companies only reiterating their previous forecasts, it’s no wonder we are selling stocks sell-off on seemingly good news.

*Note - our full breakdown of this week’s major reports so far will be sent out in a special mid-week edition of our Earnings Recap tomorrow (Thursday) morning.

FTC votes to ban noncompete clauses that bar employees from working for competitors

The Federal Trade Commission voted 3-2 to enact a nationwide ban on noncompete agreements, commonly used by companies to restrict employees from joining competitors in the same industry.

The rule is set to take effect 120 days after publication in the Federal Register, though it is expected to face legal challenges from business groups, some of which have already sued to block the ban.

Once implemented, the rule will prohibit new noncompete clauses and require existing ones to be scrapped for most employees, excluding only senior executives earning over $151,164 annually in policy-making roles. The FTC estimates that around 30 million American workers, or 18%, are currently bound by noncompete agreements.

Advocates argue that these agreements suppress wages, hinder innovation, and stifle economic growth, with the FTC receiving significant support for the ban proposal. However, business trade groups defend noncompetes as necessary to protect intellectual property and company secrets, suggesting alternatives like non-disclosure agreements.

This vote reflects the FTC's role in President Biden's broader campaign against corporate power and market dominance, including its efforts to challenge proposed corporate mergers and address pricing practices contributing to inflation.

The Second Half

The second half of the week will be about the PCE report and earnings from some of the largest companies in the U.S.. Both will have significant influence on market action.

Earnings Reports

There are several major earnings still on the way this week. Here at The Investor’s Edge we will be watching:

• Wednesday (after-close): Meta, IBM, Waste Management, Chipotle

• Thursday: Microsoft, Alphabet, Merck, Caterpillar, Intel, Union Pacific, Tractor Supply, L3Harris

• Friday: ExxonMobil, AbbVie, Chevron

Here is the calendar of earnings releases scheduled for the rest of the week:

Economic Reports

Here is the calendar of events scheduled for the remainder of the week:

The PCE report will be the major catalyst of the week as investors are concerned about a second wave of inflation and are looking for data to aid in the market’s interest rate projections for the remainder of the year. There will also be the GDP report, pending home sales, initial jobless claims and consumer sentiment data.

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.