Markets Today: Tech Stocks Gain on Strength in Tesla

Morning Markets

September E-Mini S&P 500 futures (ESU23) this morning are down -0.07%, and Sep Nasdaq 100 E-Mini futures (NQU23) are up +0.04% at a 2-week high.

U.S. stock index futures this morning are mixed.  A +6% jump in Tesla in pre-market trading is leading technology stocks higher after the company reported record quarterly sales.  U.S. stocks have carry-over support from a rally in Chinese stocks today on better-than-expected Chinese manufacturing news and a rally in the Euro Stoxx 50 to a 15-year high.  Also, energy stocks are climbing as crude prices rallied to a 1-week high after Saudi Arabia said it would extend its voluntary cut of crude output of 1 million bpd through August.  Today's market activity may be below average as stock and bond markets close early before Tuesday’s July 4th holiday, when U.S. markets will be closed. 

Today’s June ISM manufacturing index is expected to inch up to 47.1 from 46.9 in May.  The markets will also look to the June prices paid sub-index of the ISM report for signs that price pressures are continuing to ease. The June ISM prices paid is expected to slip to 44.0 from 44.2 in May. 

The markets are discounting the odds at 85% for a +25 bp rate hike at the next FOMC meeting on July 25-26.  The markets are anticipating a peak funds rate of 5.42% by November, which is +35 bp higher than the current effective federal funds rate of 5.07%.

Global bond yields are higher.  The 10-year T-note yield is up +1.2 bp at 3.849%.  The 10-year German bund yield is up +5.6 bp at 2.448% and the 10-year UK Gilt yield is up +4.4 bp at 4.432%.  

Overseas stock markets are mixed.  The Euro Stoxx 50 is up +0.24%.  China’s Shanghai Composite Index today closed +1.31%.  Japan’s Nikkei Stock Index today closed +1.70%.

The Euro Stoxx 50 rallied to a 15-year high today and is moderately higher.  Gains in mining stocks, energy producers, and banking shares are leading the overall market higher.  The upside is contained by weakness in consumer products and health care companies.  Also, signs of stagnation in Eurozone manufacturing activity is bearish for stocks after the news today showed the Eurozone Jun S&P manufacturing PMI was revised downward to its lowest level in 3 years.

The Eurozone Jun S&P manufacturing PMI was revised downward to 43.4 from the initially reported 43.6, the steepest pace of contraction in more than three years.

China’s Shanghai Composite climbed to a 1-1/2 week high today and closed moderately higher.  Strength in technology stocks led the overall market higher as semiconductor production equipment stocks gained after Jeffries said new ultraviolet lithography export rules announced by the Dutch government Friday were less restrictive than expected.  Also, Chinese electric vehicle makers and battery producers rallied after BYD Co., China’s top selling car brand, reported its best-ever quarter, selling 700,244 electric and hybrid vehicles in Q2.  In addition, today’s economic news showed Chinese manufacturing activity slowed less than expected in June.

The China Jun Caixin manufacturing PMI fell -0.4 to 50.5, stronger than expectations of 50.0.

Japan’s Nikkei Stock Index today rallied to a 2-week high and is just below last month’s 33-year high.  Optimism in Japan’s economic recovery underpins equities after a gauge of confidence in Japan’s large manufacturers rose in Q2, the first improvement in almost two years.  Japanese suppliers to electric battery makers rallied today after Tesla reported it delivered a record number of vehicles in Q2.  Tourism stocks also jumped today after Japan’s National Tourism Organization reported that visitors from abroad recovered to almost 70% of pre-pandemic levels as of May, boosting regional economies and service industries, including hotels and restaurants.

The Japan Q2 Tankan large manufacturing business conditions rose to 5, stronger than expectations of 3 and the first increase in seven quarters.

Pre-Market U.S. Stock Movers

Tesla (TSLA) jumped more than +6% in pre-market trading after reporting it delivered a record 466,140 cars worldwide in Q2, better than the consensus of 448,350.

Electric-vehicle makers are moving higher in pre-market trading after Tesla and BYD Co set fresh sales records in Q2.  Rivian Automotive (RIVN), Lucid Group (LCID), and Nikola (NKLA) are up more than +1%. 

Fidelity National Information Services (FIS) surged more than +9% in pre-market trading after the Financial Times reports that private equity firms are considering buying a majority stake in Wordpay at a valuation exceeding $15 billion, a move analysts said is positive for the share price of FIS. 

McKesson Corp (MCK) climbed more than +6% in pre-market trading after Fidelity Health Care Services Portfolio boosted its holdings in the stock by +14% in May.

Energy producing stocks are climbing in pre-market trading with the price of WTI crude up more than +1% at a 1-week high.  Baker Hughes (BKR), Chevron (CVX), ConocoPhillips (COP), Devon Energy (DVN), Diamondback Energy (FANG), Exxon Mobil (XOM), Marathon Oil (MRO), Occidental Petroleum (OXY), and Schlumberger (SLB) are up +1% or more.

AstraZeneca (AZN) tumbled more than -6% in pre-market trading after Barclay said the lack of the phrase “clinically meaningful” and the presence of deaths related to the trial of its lung cancer drug candidate datapotamab are key concerns for the drug. 

Paramount Global (PARA) slid more than -1% in pre-market trading after the opening of the Indiana Jones and the Dial of Destiny movie brought in $60 million in ticket sales in North America over the weekend, below the consensus of $70.3 million.

Today’s U.S. Earnings Reports (7/3/2023)

None.

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