July 16, 2024


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Stock Market Rally Attempt Faces Resistance; Oil Prices, Treasury Yields Hit Highs

A stock market rally attempt tried to gain steam, with leading stocks flashing early buy signals. But the major indexes hit resistance at key levels and have not confirmed the new rally. A weaker-than-expected jobs report didn’t move stocks, but the 10-year yield kept rising on expectations that the Fed will go ahead with tapering bond buys. Crude oil prices are at multiyear highs.


Facebook (FB) suffered a systemwide outage Monday, while a whistleblower testified before Congress about the social media’s profit-over-safety focus. General Motors (GM) aims to double revenue by 2030 on electric vehicles and self-driving cars. Tesla will move its headquarters to Austin, Texas, as it gets set to start rolling out FSD Beta to more customers. Crude oil prices hit record highs, but then backed off. Affirm (AFRM) surged on its latest “buy now, pay later” partnership.

Market Rally Attempt Underway

The Dow, S&P 500 and Nasdaq composite rebounded from Monday sell-offs, but hit resistance at key moving averages. None of them have yet confirmed the new rally attempt. Many leading stocks showed promising action, but generally stalled late in the week along with the broader market. The 10-year Treasury yield topped 1.6%, the highest point in several months, despite a weak-to-mixed jobs report. Crude oil prices hit multiyear highs.

Jobs Weak, But Enough For Fed?

The U.S. added just 194,000 jobs in September, far below view. But the headline figure partly reflected a surprise 123,000 drop in government jobs. Also average hourly wages rose 4.6% vs. a year earlier while the average workweek expanded. The jobless rate tumbled to 4.8% from 5.2%, due to people leaving the labor force even as the household survey showed the ranks of the employed grew by 526,000.

Economists generally expect the Fed to go ahead with tapering bond buys at the November meeting.

Market Rally, 5 Top Stocks At Inflection Point

Facebook Woes Continue

FormerĀ Facebook (FB) employee turned whistleblower Francis Haugen gave hours of damaging testimony at a Senate hearing, saying the social media giant consistently placed profit above safety and was harming teenage females on Instagram with negative messages, among other allegations. The hearing was the culmination of an in-depth investigation and series of articles by the Wall Street Journal, based on thousands of documents Haugen gathered. The Facebook hearing is expected to lead to more hearings and regulations. Meanwhile on Monday, Facebook, Instagram and other FB properties were offline for six hours. FB stock fell solidly, the fourth straight weekly decline.

Tesla Moving HQ To Austin

CEO Elon Musk said at a shareholder meeting on Oct. 7 in Austin, Texas, the company would move its headquarters there from Palo Alto, Calif. Meanwhile, the FSD Beta 10.2 version of self-driving technology was to release at midnight on Friday to about 1,000 owners with perfect safety scores. On Oct. 2, Tesla reported strong Q3 deliveries, despite chip shortages hampering production industrywide. Tesla delivered 241,300 electric vehicles in Q3, up from 201,250 in Q2 and 184,800 in Q1. FactSet consensus was 232,000. The EV giant delivered 232,025 Model 3 and Y vehicles in third quarter, as well as 9,275 Model S and X vehicles.

GM Aims To Double Sales By 2030

General Motors (GM) set an ambitious target to double annual revenue to $280 billion by 2030, saying it will leverage subscription software services built around increasingly all-electric vehicles. GM expects new software-driven, higher-margin businesses to boost profit margins to 12%-14%, up from 8% in 2020. The auto giant took direct aim at Tesla (TSLA), saying it will surpass that rival in sales of electric cars. A Chevy Silverado will debut in January, following a high-end Hummer EV that’s set to hit the road by end of 2021. Those new electric vehicles lead GM’s planned rollout of 30 new EVs globally by 2035. On the self-driving front, GM announced Ultra Cruise, its next-gen, hands-free, driver-assist system. And it confirmed that it’s looking to commercialize Cruise, its driverless car subsidiary, touting potential revenue of $50 billion by 2030. Cruise expects to lower the cost of ride-hailing from about $5 a mile today to $1.50 a mile by removing the driver. While touting EVs, the auto giant expects to expand profits from combustion trucks and SUVs as it makes the electric shift. GM stock jumped, flashing buy signals.

Ford (F) and Stellantis (STLA), which owns Fiat Chrysler and Peugeot, joined General Motors (GM) in reporting double-digit U.S. sales declines for the third quarter. Ford sales plunged 27% year on year. Stellantis sales dropped 19%. Ford did report a big jump in September retail sales vs. August, and suggested that chip shortages should start to ease. Ford cleared an aggressive entry.

OPEC Stays The Course

OPEC+ agreed to stay the course and slightly increase output by 400,000 barrels per day at its meeting Monday. But analysts say slow unwind of pandemic-era supply cuts won’t be enough to meet growing demand. Energy shortages related to natural gas in the U.K. and coal in China are expected to spill over into the crude markets. Callon Petroleum (CPE) raised its Q3 and full-year production outlook Tuesday after closing its deal to buy Primexx Energy Partners’ assets in the Delaware Basin. Callon also agreed to sell noncore acreage in the Eagle Ford.

Affirm Soars On Target ‘Pay Later’ Deal

Target (TGT) will team up with Affirm (AFRM) and Sezzle for the holiday season, becoming the latest retailer to jump on the “buy now, pay later” trend popular with younger shoppers. Affirm already works with Walmart (WMT) and recently reached a deal with Amazon (AMZN). Affirm stock spiked, the latest huge move for the fintech.

News In Brief

Acuity Brands (AYI), a maker of lighting fixtures and controls in buildings, reported fiscal fourth-quarter earnings that beat expectations, helped by a recovery in the construction market. Shares broke out on Wednesday.

Tilray (TLRY), a Canadian cannabis producer, reported first quarter results that missed expectations.

Levi Strauss (LEVI) beat third-quarter views. The jeans-maker’s fourth-quarter outlook came in slightly below estimates. But it raised its full-year profit outlook above forecasts and said it saw full-year sales “nearly reaching 2019” levels. Shares jumped from a six-month low.

Conagra Brands (CAG) reported fiscal first quarter results that beat estimates. The packaged-food giant also raised its forecast for full-fiscal-year organic net sales growth.

Palantir Technologies (PLTR) won a contract to work on the U.S. Army’s intelligence data fabric and analytics foundation. The Army selected Palantir for the next phase of its $823 million contract.


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