Stock market today: Nasdaq leads gains to kick off new quarter as Tesla pops 6%
07/02/2024 03:14
Political turmoil in France gripped investors weighing whether stocks can build on their stellar first-half performance.
US stocks edged higher on Monday to start the second half — and third quarter — of 2024 as investors began counting down to the July 4 break and the key US jobs report.
The Dow Jones Industrial Average (^DJI) rose 0.1% while the S&P 500 (^GSPC) gained 0.3%. The tech-filled Nasdaq Composite (^IXIC) climbed about 0.8%.
Tesla (TSLA) stock popped roughly 6% ahead of the EV giant's quarterly delivery results due out on Tuesday. Meanwhile, Nvidia (NVDA) shares erased earlier losses, temporarily easing worries the chip heavyweight could be trading in treacherous waters.
Stocks are having a bumpy ride to kick off a trading week cut short by the Independence Day holiday. Investors are debating whether the second half will bring a pullback or a broadening in the record-breaking tech-driven rally that lifted the benchmark S&P 500 to a near-15% gain this year so far.
Coming into focus is the June jobs report due Friday, watched for signs of cooling in the labor market that could help make a case for interest rate cuts. Encouraging signs that inflation is slowing toward the Federal Reserve's target, plus emerging cracks in the economy, have spurred hopes for a policy pivot.
US manufacturing activity data released on Monday showed the Institute for Supply Management's manufacturing PMI fell further into contraction territory in June, hitting a four-month low.
US political risks have also started to emerge into the picture amid questions about whether President Joe Biden's future as the Democratic Party's standard bearer.
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S&P 500, Nasdaq edge higher as Tesla soars 6%
Stocks gained on Monday with tech and consumer discretionary ticking higher to kick off the third quarter of the year.
The Dow Jones Industrial Average (^DJI) rose 0.1% while the S&P 500 (^GSPC) nudged up roughly 0.2% The tech-heavy Nasdaq Composite (^IXIC) gained 0.8%.
Shares of Nvidia (NVDA) erased earlier session losses while Tesla (TSLA) popped more than 6% ahead of its quarterly delivery numbers expected Tuesday morning.
Amazon (AMZN) and Apple (AMZN) each gained roughly 2%.
This will be a shortened trading week in observance of the Fourth of July on Thursday. However, investors will look ahead to the June jobs report due on Friday prior to the market open. A cooling labor market would make the chance of a Federal Reserve rate cut this fall more likely.
The summer usually brings some down market days
The roaring stock market rally has come with limited hiccups this year. And many think the S&P 500 has even more room to run this year.
But that doesn't mean those gains will keep coming in a straight line. Ritholtz Wealth Management's chief marke strategist Callie Cox noted the summer usually brings a few more storms to markets.
Dating back to 1970, the S&P 500 has had an average of sveen single-day declines of 1% or more during the months of June, July, and August. Cox points out these declines make sense when considering "stocks can be more susceptible to quick, sharp drops solely because there are fewer people out there to buy and sell."
The S&P 500 hasn't had such a drawdown yet this year, posing the possibility that the benchmark will cruise through the summer trading period without a 1% down day for the first time since 1979.
There is a growing list of reasons strategists believe a pullback could come during peak beach season, though, including companies failing to meet high earnings expectations, rising volatility as presidential election chatter intensifies, and a slew of economic data that could disappoint amid a still uncertain Federal Reserve interest rate path.
But Cox points out that the prospect of a pullback "should make you more excited than nervous."
According to Cox, about one-third of the S&P 500's 5% drops since 1950 have lasted less than a month.
"If you have the foresight to realize that many selloffs aren’t devastating crashes, then every storm is a chance to dance in the rain," Cox said. "Invest your extra cash, or buy low with the hope of selling higher."
Why Fed rate cuts may not bode well for housing stocks
Lower interest rates should, in theory, boost the housing market — and, by virtue, housing-related stocks.
If mortgage rates were to drop from current levels, that should incentivize more buyers to buy and sellers to sell. That would be good news for America's biggest homebuilders like DR Horton (DHI) and Lennar (LEN).
But it's not that simple. In an interview with Yahoo Finance, Bank of America analyst Rafe Jadrosich explained that the reasons the Federal Reserve was cutting interest rates would be a big factor in determining how much builders would benefit.
“If rates are coming down because the economic environment is really weak, that is not good for homebuilders,” Jadrosich told Yahoo Finance in an interview.
So far the economy has appeared to hold up in the high interest rate environment. But there are some signs of cracks emerging. Recently released retail sales data for May showed the pace of consumer spending is cooling down from last year. And the unemployment rate ticked to its highest level since 2022 during the month. Investors will get their next update on labor market conditions on Friday with the release of the June jobs report.
Last month, Lennar CEO Stuart Miller said on a post-earnings conference call that US consumers were feeling a "little bit more distressed," noting that the company was seeing "a little bit more credit challenge" among its customers.
Still, an economic downturn is a worst-case scenario.
"If rates are coming lower and the economic backdrop stays strong, that is the ideal environment. Because the cost of buying a house will go lower. Builders will see demand improve. They'll be able to pull back from ... incentives, which is gonna help their margin,” the analyst added.
Apple's China issues could hamper iPhone sales in 2025: Analyst
Yahoo Finance's Dan Howley reports:
Apple (AAPL) is expected to launch its next-generation AI-centric iPhone in September, but the company's Apple Intelligence software platform may not be enough to spark a new sales supercycle in 2025. That's according to UBS Global Research analyst David Vogt, who says Apple's market share losses in China to homegrown companies like Huawei, act as a "material governor on iPhone unit growth."
Apple is heavily dependent on iPhone sales in China, its third-largest market by total revenue behind the Americas and Europe. In 2023, China accounted for $72.56 billion of Apple's $383.3 billion in revenue. The Americas brought in $162.6 billion, while Europe made up $94.3 billion.
Read more here.
Trending tickers on Monday
Tesla (TSLA)
Shares of the electric vehicle giant gained more than 6% ahead of the company's quarterly delivery numbers due out on Tuesday.
The stock has gained nearly 50% since April 22, when it touched a 52-week low of $138.80 per share.
Chewy (CHWY)
Chewy stock erased earlier gains after an SEC filing revealed popular investor Keith Gill has a 6.6% stake in the pet-related retailer. Shares erased earlier gains to fall more than 5% by afternoon trading.
Boeing (BA)
Boeing announced it will buy supplier Sprit Aero in a deal valued at roughly $8.3 billion, including debt.
Shares of the plane manufacturer rose more than 2% on Monday.
Nvidia flips into green territory, erases morning losses
Nvidia (NVDA) stock climbed into green territory on Monday, erasing early trading losses of more than 3%.
The AI heavyweight rose fractionally to help lift the tech-heavy Nasdaq Composite (^IXIC) solidly into green territory by mid-session.
Shares of EV giant Tesla (TSLA) also climbed more than 6% on Monday.
BlackRock’s Fink: Buying Preqin unlocks ‘democratization of all alternatives’
Yahoo Finance's David Hollerith reports:
BlackRock (BLK) CEO Larry Fink made it clear Monday that his firm’s acquisition of London data provider Preqin is part of a much larger vision he has to make private markets a lot more investable.
"We anticipate indexes and data will be important to future drivers of the democratization of all alternatives," Fink said on a Monday morning conference call. "And this acquisition is the unlock."
BlackRock and other asset management firms are making an aggressive expansion into private markets as the financial world pushes deeper into alternative assets that aren’t publicly traded.
These assets include everything from private equity and credit to real estate, infrastructure projects, and even ownership of music rights.
Read more here.
Tesla pops 6% ahead of deliveries print, stock up nearly 50% since April
Tesla's (TSLA) upward trend continued Monday as shares gained another 6% ahead of the electric vehicle giant's latest quarter delivery numbers due out on Tuesday.
Analysts expect the manufacturer's deliveries to drop 5.4% to 441,019 vehicles during the second quarter, according to Bloomberg data.
Tesla shares have steadily climbed in recent months. The stock is up nearly 50% since it touched a 52-week low of $138.80 on April 22.
And the top voter concern is....
Morgan Stanley is out with a new survey, clearly showing that inflation remains the top concern among voters.
Rising prices remains a top worry with consumers. (Morgan Stanley) Manufacturing activity hits a four-month low
The rebound in US manufacturing activity seen in early 2024 is proving to be a head fake.
The Institute for Supply Management's manufacturing PMI indicated the sector fell further into contraction territory in June, hitting a four-month low.
The ISM's manufacturing PMI registered a reading of 48.5 in June, down from May's reading of 48.7 and below the 49.1 economists expected, according to Bloomberg data. A print below 50 reflects a shrinking in activity.
The consistent declines over the past several months come after activity in the manufacturing sector hit a 22-month high in April, per the ISM's report.
“U.S. manufacturing activity continued in contraction at the close of the second quarter. Demand was weak again, output declined, and inputs stayed accommodative," Timothy Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee, said in a release.
Fiore added: "Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions."
Chewy stock surges after 'Roaring Kitty' discloses 6.6% stake
Chewy (CHWY) stock soared more than 20% in pre-market trading on Monday before paring gains after an SEC filing revealed popular investor Keith Gill has a 6.6% stake in the company.
Shares were up more 6% in early trading on Monday.
The July 1 filing showed Gill, a popular meme stock trader who goes by the online name "Roaring Kitty," owned 9.1 million shares of Chewy on June 24.
Notably, that means Gill owned the shares before a post on X from Roaring Kitty sent Chewy shares soaring as much as 30% on June 27. The account posted a cryptic photo of a dog at 1 p.m. ET, sending the stock surging before it eventually lost gains and closed below the flat line.
Why Gill is interested in Chewy is largely unknown. Gill talked glowingly about current GameStop CEO Ryan Cohen, who is also the founder of Chewy, during a live stream on June 7 but hasn't made direct comments about the petcare provider. Notably, Cohen is no longer on the executive board at Chewy.
Gill's filing also provided little clues. Outside, of listing how many shares Gill owns, the 13-G filing provided one other detail. Gill included a box that asks to check the appropriate box for whether or not the filer is, or is not, a cat.
Gill checked the box labeled "I am not cat."
Stocks tick higher to kick off second half of 2024
Stocks opened higher on Monday to kick off the third quarter of the year as investors await a key jobs monthly jobs report on Friday.
The Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) both nudged roughly 0.3% higher. The tech-heavy Nasdaq Composite (^IXIC) also opened slightly higher.
This will be a shortened holiday week as the markets close early on Wednesday in observance of the Fourth of July on Thursday. However, the June jobs report is due on Friday prior to the market open. A cooling labor market would make the chance of a Federal Reserve rate cut this fall more likely.
The weekend after the Biden/Trump debate
The weekend was full of public support by prominent Democrats for President Biden after his brutal debate performance.
The WSJ is reporting the Biden family urged him to continue moving forward during a weekend gathering at Camp David. Meanwhile, a CBS poll taken after the debate found that only 27% of voters think Biden has the cognitive health to serve as president — down from 35%. Indeed those numbers made the rounds on TV over the weekend.
In the end, no signs the market will have to endure a surprise (this would still be a surprise, I think) announcement of Biden dropping out of the race in the near term.
"All in all, the events following the debate have gone as well as Team Biden could’ve hoped for. We think it’s more likely that they press ahead than that they throw in the towel. However, they — and many other stakeholders in this process — are still waiting for some of the most critical information: a better sense of what the voters think this all means and what the race looks like going forward," said Evercore ISI strategist Sarah Bianchi in a note this morning.
For more on this topic, check out Yahoo Finance anchor Seana Smith's latest column here.
Optimism on corporate earnings continues
Investors are certainly feeling upbeat about the outlook for corporate profits.
The top 10 companies in the S&P 500 (^GSPC) make up 35% of the market cap but only 23% of earnings, pointed out Apollo chief economist Torsten Sløk in the below chart. The divergence has never been bigger. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
Too much optimism priced into stocks? (Apollo)
