Markets Today: Stocks Higher as Tesla Jumps on Charging Pact with GM

Morning Markets

June E-Mini S&P 500 futures (ESM23) this morning are up +0.01%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.22%.

U.S. stock index futures this morning are slightly higher, buoyed by a +6% jump in Tesla after General Motors announced that it is joining Tesla’s charging network.  Higher T-note yields this morning are limiting the upside in stocks.  The markets are looking ahead to interest rate decisions from the Fed, ECB, and BOJ next week.

Market expectations for the Fed to raise the fed funds target range by +25 bp at next week’s FOMC meeting rose to 30% today from 28% on Thursday. 

Global bond yields are higher.  The 10-year T-note yield is up +3.5 bp at 3.753%.  The 10-year German bund yield is up +0.3 bp at 2.406%, and the UK 10-year gilt yield is up +0.5 bp at 4.238%.

On the bullish side for stocks, Tesla is up more than +6% in pre-market trading after General Motors said it would adapt its electric vehicles to Tesla’s Superchargers, following a similar move from Ford Motor last month.  Also, DocuSign is up more than +8% after reporting Q1 revenue above consensus and raising its 2024 revenue forecast.  In addition, Braze Inc is up more than +13% after reporting Q1 revenue above consensus and raising its 2024 revenue forecast.

On the bearish side, Target slid more than -1% in pre-market trading after Citigroup downgraded the stock.  Also, UiPath is down more than -1% after Wells Fargo Securities downgraded the stock.  In addition, First Watch Restaurant Group is down more than -5% after announcing the launch of an underwritten secondary offering of 3 million shares by funds managed by Advent International Corporation.

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.34%.  China’s Shanghai Composite closed up +0.55%, and Japan’s Nikkei Stock Index closed up +1.97%. 

The Euro Stoxx 50 index today is moderately lower.  Weakness in chemical companies is leading the overall market lower, with Croda International Plc plunging more than -13% after its pretax profit forecast fell well short of consensus.  Signs of a deteriorating economic outlook are also weighing on European stocks after today’s news showed Italy’s Apr industrial production unexpectedly fell by the most in 7 months.  On the positive side, pharmaceutical stocks rose, led by a nearly +1% gain in AstraZeneca Plc after its collaboration with Sanofi on a drug to prevent respiratory syncytial virus won support from a U.S. regulatory panel for use in infants.

Italy's Apr industrial production unexpectedly fell -1.9% m/m, weaker than expectations of +0.2% m/m and the biggest decline in 7 months.

In a note to clients, Bank of America said EPFR data showed European equity funds saw outflows of $2.6 billion in the week through June 7, the 13th straight week of redemptions. 

China’s Shanghai Composite Stock Index today posted moderate gains.  Chinese stocks moved higher today on speculation the government will boost stimulus measures after economic news showed a tepid gain in China May consumer prices and the sharpest decline in May producer prices in more than seven years. A weakening in the China’s economic recovery and consumer prices close to zero have fueled calls for more stimulus measures.  Chinese automakers also rallied for a second day after China’s Commerce Ministry on Thursday said it would launch nationwide promotions to boost vehicle sales in cities and new-energy vehicle sales in rural areas.  The government will encourage financial institutions to roll out credit support measures for auto purchases and improve charging facilities for electric vehicles in rural areas.

China May CPI rose +0.2% y/y, right on expectations.  Also, May PPI fell -4.6% y/y, weaker than expectations of -4.3% y/y and the largest decline in 7-1/4 years.

PBOC Governor Yi Gang downplayed deflation risks when he said China’s economy is still in recovery from the pandemic, and there’s a time lag between the rebound in demand and supply. He attributes the slowdown in inflation in recent months to the weaker recovery in demand, along with a high base of comparison from last year for energy and vegetable prices.

Japan’s Nikkei Stock Index today closed sharply higher and capped its ninth-straight week of gains.  Japanese stocks found support from the jump in U.S. jobless claims to a 19-month high Thursday, which bolsters the outlook for the Fed to pause its rate hike campaign. Heavy foreign buying of Japanese stocks, company reforms, stable inflation, and continued easing by the BOJ have sparked a rally in Japanese stocks and pushed the Nikkei Stock Index to a 32-year high this week. 

The Nikkei Stock Index is the best performer this year among G-7 stock bourses.  Japanese insurance stocks also rallied today after Citigroup upgraded MS&AD Insurance Group and Dai-ichi Life to buy from hold.  The yen weakened, Japanese bond yields fell, and stocks added to their gains today after Bloomberg reported that BOJ officials are said to see little need to adjust yield-curve control (YCC) policy in next week’s policy meeting. 

Pre-Market U.S. Stock Movers

Tesla (TSLA) is up more than +6% in pre-market trading after General Motors said it would adapt its electric vehicles to Tesla’s Superchargers, following a similar move from Ford Motor last month.  General Motors (GM) also rose more than +4% on the news.

DocuSign (DOCU) jumped more than +8% in pre-market trading after reporting Q1 revenue $661.4 million, above the consensus of $642 million, and raised its 2024 revenue forecast to $2.71 billion-$2.73 billion from a previous forecast of $2.70 billion-$2.71 billion, better than the consensus of $2.70 billion. 

Carvana (CVNA) climbed more than +7% in pre-market trading after it said it expects Q2 adjusted earnings would be $50 million, well above the consensus of a loss of -$3.6 million. 

Braze Inc (BRZE) surged more than +13% in pre-market trading after reporting Q1 revenue of $101.8 million, above the consensus of $99.2 million, and raised its 2024 revenue forecast to $442.5 million-$446.5 million from a previous forecast of $433 million-$438 million, stronger than the consensus of $436.5 million. 

Adobe (ADBE) climbed more than +2% in pre-market trading after Wells Fargo Securities upgraded the stock to overweight from neutral with a price target of $525. 

Corning (GLW) rose more than +2% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $38.

Target (TGT) slid more than -1% in pre-market trading after Citigroup downgraded the stock to neutral from buy, citing a deceleration in foot traffic and tough competition.

UiPath (PATH) fell more than -1% in pre-market trading after Wells Fargo Securities downgraded the stock to equal weight from overweight. 

First Watch Restaurant Group (FWRG) dropped more than -5% in pre-market trading after announcing the launch of an underwritten secondary offering of 3 million shares by funds managed by Advent International Corporation.

Today’s U.S. Earnings Reports (6/9/2023)

Seneca Foods Corp (SENEA).

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