Stocks on Wall Street rose on Monday, capping off a significant week filled with Federal Reserve interest rate decisions, the monthly jobs report and earnings from the Magnificent Seven’s tech giants.
The S&P 500 (^GSPC) rose 0.3% and the tech-heavy Nasdaq Composite Index (^IXIC) rose about 0.4% as Tesla (TSLA) stock soared on positive news from China. The Dow Jones Industrial Average (^DJI), which has few tech stocks, rose about 0.1%.
Stocks are eyeing a return to Friday’s surge, with stronger earnings from Alphabet (GOOG, GOOGL) and Microsoft (MSFT) increasing optimism that the Big Tech-led rally will continue. This week’s quarterly reports from Apple (AAPL) and Amazon (AMZN) will put those hopes to the test again, putting the costs and prospects of AI under the microscope.
Among technology insiders, Tesla CEO Elon Musk’s surprise visit to China on Sunday will have immediate benefits for the EV maker, with two major changes in the country’s rollout of fully self-driving software. Cleared the barrier. Tesla shares rose more than 11% after the company reached an FSD-related agreement with Baidu (BIDU) that is seen as potentially stemming a sales slump in the huge market. The Chinese internet giant’s U.S.-listed shares rose about 7%.
At the same time, investors are counting down to the Federal Reserve’s policy decision at the end of its two-day meeting on Wednesday. There is widespread confusion over whether inflation has stopped cooling and what continued price pressures mean for interest rate cuts.
The central bank is expected to keep interest rates on hold at their highest level in 23 years, but debate is heating up over the timing and possibility of a rate cut in 2024. The focus will be on whether Fed policymakers reverse their previous outlook for significant borrowing relief. It costs money. Traders have already scaled back their bets, and the April jobs report that concludes this week could move the needle again.
Among big individual stocks on Monday, U.S.-listed stocks gained more than 36% after medical device maker Philips (PHG) announced it had agreed to a $1.1 billion deal to resolve claims related to a respiratory recall. It skyrocketed. The settlement amount was significantly lower than expected.
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Key points about Tesla from EvercoreISI
This morning’s Analyst Note, at least to me, is a 61-page in-depth article on Tesla (TSLA) by Evercore ISI analyst Chris McNally.
Citing a number of concerns, McNally lowered his price target from $155 to $145 (the stock is up 7% premarket following Musk’s AI win in China over the weekend). (As a result, the stock price of Baidu, its new partner, has also increased). Tesla plans to reach sales in 2024.
McNally makes a great point in his report about Tesla’s inability to expand its market due to a lack of models. He uses his BMW as an example of a car company that sells multiple models to attract different types of consumers.
Tesla could learn a few things from BMW. (Evercore ISI)
