Stocks Post Modest Gains as Strength in Tesla Pushes Tech Stocks Higher

What you need to know…

The S&P 500 Index ($SPX) (SPY) Friday closed up +0.11%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.30%.

Stock indexes Friday settled modestly higher, with the S&P 500 posting a 9-3/4 month high, the Dow Jones Industrials posting a 5-week high, and the Nasdaq 100 posting a 14-month high.  Strength in technology stocks led the overall market higher, with Tesla climbing more than +4% after General Motors announced that it is joining Tesla’s charging network for electric vehicles. 

Higher T-note yields on Friday limited 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 31% Friday from 28% Thursday. 

Global bond yields on Friday were mixed.  The 10-year T-note yield rose +2.5 bp to 3.743%.  The 10-year German bund yield fell -2.5 bp at 2.377%, and the UK 10-year gilt yield rose +0.6 bp to 4.239%.

On the bullish side of stocks, Tesla closed up more than +4% after General Motors said it would adapt its electric vehicles to Tesla’s Superchargers. Also, Etsy closed up more than +4% after a report from Sensor Tower showed Etsy’s May app downloads rose +27% y/y and beat other e-commerce competitors.  In addition, Salesforce closed up more than +2% after it said it was expanding its AI product offerings with Marketing GPT and Commerce GPY to adapt to customer needs.   

On the bearish side, weakness in regional bank stocks weighed on the overall market. Also, Target closed down more than -2% after Citigroup downgraded the stock.  In addition, Xcel Energy closed down more than -1% after a report from the Boulder County Sheriff’s Office regarding 2021 fires in Colorado that laid blame on an Xcel powerline. 

Overseas stock markets Friday settled mixed.  The Euro Stoxx 50 closed down -0.18%.  China’s Shanghai Composite closed up +0.55%, and Japan’s Nikkei Stock Index closed up +1.97%. 

Today’s stock movers…

Tesla (TSLA) closed up more than +4% to lead gainers in the Nasdaq 100 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.

Etsy (ETSY) closed up more than +4% after Sensor Tower data showed Etsy’s May app downloads rose +27% y/y and beat other e-commerce competitors. 

Adobe (ADBE) closed up more than +3% after Wells Fargo Securities upgraded the stock to overweight from neutral with a price target of $525. 

Salesforce (CRM) closed up more than +2% to lead gainers in the Dow Jones Industrials after it said it was expanding its AI product offerings with Marketing GPT and Commerce GPY to adapt to customer needs.   

Corning (GLW) closed up more than +3% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $38.

Netflix (NFLX) closed up more than +2% after research firm Antenna reported that Netflix averaged more than 70,000 new customers a day in the four days after it began telling customers they could no longer share passwords on May 23. 

Braze Inc (BRZE) closed up more than +16% 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. 

Weakness in regional bank stocks is weighing on the overall market.  Comerica (CMA) and Zions Bancorp (ZION) closed down more than -3%.  Also, Huntington Bancshares (HBAN) and Citizens Financial Group (CFG) closed down more than -2%.  In addition, Fifth Third Bancorp (FITB), M&T Bank (MTB), Lincoln National (LNC), and Truist Financial (TFC) are down more than -1%.

Target (TGT) closed down more than -2% after Citigroup downgraded the stock to neutral from buy, citing a deceleration in foot traffic and tough competition.

Xcel Energy (XEL) closed down more than -1% after a report from the Boulder County Sheriff’s Office said hot particles from an Xcel Energy powerline were the most likely cause of one of the two wildfires in Colorado in 2021 that destroyed more than 1,000 homes.

Celanese (CE) closed down more than -1% after Vertical Research Partners downgraded the stock to hold from buy.

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

Across the markets…

September 10-year T-notes (ZNU23) on Friday closed down -11 ticks, and the 10-year T-note yield rose by +2.5 bp to 3.743%.  Sep T-notes Friday posted moderate losses as strength in stocks curbed the safe-haven demand for T-notes.  Also, supply pressures weighed on T-notes as bond dealers put on short hedges in T-notes futures to set up for next week’s $90 billion auctions of T-notes and T-bonds, beginning with Monday’s $40 billion auction of 3-year T-notes and $32 billion auctions of 10-year T-notes. T-notes recovered from their worst levels after Friday’s weaker-than-expected Canada May jobs report sparked a rally in 10-year Canadian bond prices that provided some carry-over support for T-note prices.   

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