Key Highlights

● Carvana posted record quarterly revenue and net income.

● The SEC closed an investigation into the company with no action.

● Higher auto-loan rates remain a challenge for car buyers.

● Detailed unit and per-vehicle figures were not immediately available.

Carvana shares climbed in extended trading on Wednesday, October 28, after the online used-car retailer reported record quarterly revenue and record net income.

Carvana (NYSE:CVNA) rallied after the closing bell, giving the S&P 500 member one of the stronger post-earnings reactions of a crowded evening. A market recap grouped Carvana with Chipotle (NYSE:CMG) as the standout gainers after earnings, while Ford (NYSE:F) and ServiceNow (NYSE:NOW) sank.

Records on Both Lines

Carvana sells used vehicles through its website and app, handling financing, delivery and its distinctive multistory car vending towers. Its business depends on moving inventory quickly while keeping a lid on reconditioning and logistics costs.

Hitting records on both revenue and net income in the same quarter shows growth at the top line and the bottom line at once, the combination investors in a capital-heavy retailer usually want to see. The same recap said the Securities and Exchange Commission had closed an investigation into the company with no enforcement action, though it did not say how much that development contributed to the share move.

Rates and the Car Buyer

Carvana's results arrived against a challenging backdrop for car buyers. The Federal Reserve left its benchmark rate range unchanged on Wednesday in a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a hike. Markets raised their odds of a December rate increase, according to CME FedWatch.

Long-dated Treasury yields climbed, with the 10-year pushing past a key psychological threshold. Higher borrowing costs feed into auto loans, which most used-car buyers rely on. Fed Chair Kevin Warsh said financial and credit conditions have tightened for some households and businesses, consistent with expectations. Oil also rose, with West Texas Intermediate crude settling at $102.78 a barrel.

How the Market Closed

The S&P 500 ended the regular session at 7,743.98, up 21.38 points, for a third straight gain. The Nasdaq Composite rose 72.04 points to 26,549.85, and the Dow added 97.53 points to 52,475.10. Chip stocks led, while rate-sensitive utilities and real estate lagged.

The evening's earnings were a mixed bag. Microsoft (NASDAQ:MSFT) rose in extended trading after an earnings beat, while Alphabet (NASDAQ:GOOGL) slid sharply after missing estimates. Ford edged lower after the bell despite beating on earnings per share, a reminder that the auto sector was sending mixed signals.

What to Watch

Carvana's after-hours rally will be tested at Thursday's open, when regular-session trading begins. Investors will look for detail on retail unit growth, gross profit per vehicle and the company's outlook for the rest of the year.

Macro data could also move the stock. The advance estimate of third-quarter GDP and September PCE inflation figures arrive at 8:30 a.m. ET Thursday. Mastercard (NYSE:MA), Merck (NYSE:MRK) and Caterpillar (NYSE:CAT) report before the bell, with Amazon (NASDAQ:AMZN) after the close.