The tech-heavy Nasdaq pushed further into record territory last week after Tesla stock soared, recouping almost all of its losses so far in 2024.

Let’s take a closer look…

Wall Strut

An ordinary June US jobs read on Friday meant Wall Street was allowed to enjoy the weekend at a bunch of unreasonably upbeat fresh record highs.

For the week that was, the S&P500 found almost 2%, while the Dow climbed 0.7%.

But in the name of all that is unholy, the tech-heavy Nasdaq farted and fumbled its way to accruing a further 3.5%. I, for one, had the impression it wasn’t even trying.

Friday’s rally was agitated and executed by the usual megacap suspects – “The Magnificent 5” of Microsoft (MSFT), Nvidia (NVDA), Alphabet (GOOGL), Amazon (AMZN) and Meta (META).

Late last week it was wins for Apple, Microsoft and Meta, the latter jumping around 6% on Friday.

That said, even Tesla (TSLA) added 27% last week.

Sheer Musky, misty madness. (See: Elon Watch, below…)

Wall Street’s added about 16.5% since the start of the year, and the benchmark S&P500 has risen four out of the past five weeks.

The sentiment is swinging back towards an improving inflation outlook heralding in a rate cut from the US Federal Reserve.

The June consumer price index (PCI), which will be released Thursday, could supercharge those hopes if the headline improves, as is expected.

With the past two months’ CPI readings coming in cooler than estimated, analysts are once again forecasting conservatively and likely expecting the true number to come in somewhere between 3.1% and 3.4%.

The US producer price index (PPI) data drops on Friday as well.

Looking further out this week… the big US banks have some truth telling in front of them… the large ones were lower by the close of business on Friday  ahead of US Q2 corporate earnings reports, which begin this Friday.

Bank of America, Wells Fargo and JPMorgan et al were sucking the S&P500 banks index 1.6% lower.

Greg Wilensky, Head of US Fixed Income and a portfolio manager at Janus Henderson Investors, says the Goldilocks Nonfarm payroll (NFP) data from Friday couldn’t have been more conducive to soft-landing investing – a moderation of jobs market strength, but not too much softness.

“The jobs numbers were modestly below expectations when factoring in the revisions but are still indicative of a healthy labor market. This report absolutely keeps the probability of a September rate cut on the table. This still seems like the most likely outcome.”

The market’s pricing of two cuts in 2024 seems very reasonable, Wilensky reckons.

And fresh out of Cornwall, eToro’s Sydney-based Josh Gilbert told Stockhead that the US Fed’s FOMC meeting minutes available for all to pour over last week clearly showed that the US central bank is steadfast on inflation returning to 2% levels before considering a rate cut.

Josh says US consumer prices are looking flat and inflation is undeniably cooling, albeit slowly.

“As the November presidential election creeps up, the recent PCE data – the Fed’s preferred measure of inflation – came in line with expectations, lifting expectations that we will see multiple cuts in 2024.

“July is still too early for the Fed to feel confident enough to cut rates, however, absent any meaningful upside surprises in CPI and PCE over the months ahead, firmly setting the stage for a September rate cut.”

On the other hand, a few hotter-than-expected reports will likely delay the Fed’s first rate cut of this cycle…

“On the presidential campaign trail…  If the summer months heat inflation back up and push a rate cut further out to sea, President Biden will undoubtedly have to weather pointed accusations of economic mismanagement. As we’ve seen, this is a talking point that Donald Trump has already been more than happy to tap, even as the economy slows.”

 

Crypto markets

At the time of writing in Sydenham, BTC had plummeted below US$56,000, and was on track for a fourth week of declines. (Ed’s note: it’s now bounced back above $56,300 at 7.15am on Tuesday in Lilyfield.)

However, according to Tony Sycamore there’s still hope for a boost.

“Importantly for the bull case, Bitcoin [has been] trading back above important technical support at $55,000 after a brief flush below on Friday.

“If Bitcoin can reclaim the 200-day moving average on a sustained basis, currently at $58,701, it would be a good sign that BTC put in place a capitulation-type low at $53,550 on Friday and that Bitcoin can rally towards a band of resistance $72,000/$74,000 area as the correction from the $73,794 high continues.”

Here’s a chart from Tony:

Via IG

 

A.I. news

Cunningly, Global X just launched a new ETF thingy, which does the MegaTech AI plays minus the currency exchange risk with some AUD love.

The Global X FANG+ (Currency Hedged) ETF (ASX: FHNG), offers local investors exposure to the monsters of next-gen tech but finally with minimised exchange rate risk.

​The FHNG is the currency hedged version of Global X’s growth orientated Global X FANG+ ETF (ASX: FANG), which launched back in 2020 and holds more than $645 million in net assets. I think it’s their most popular growth one.

​The new AUD hedged fund does 10 US tech co’s hedged to the AUD and includes the ‘Usual 7’  – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.

Meantime, here are the seven best-performing stocks in the Indxx Global Robotics & Artificial Intelligence Thematic Index, ordered by one-year returns.

Source: Finviz

 

Market Matters wrote last week about the potential switch from tech to defensives with an eye on the recent correction being performed pver at AI stocks like NVDA.

“It felt like the market listened to at least half of our rhetoric,” MM’s James Gerrish said over the weekend.

“The market-leading AI stock Nvidia started the underperformance, correcting 16% in quick fashion from its June high.

Although it’s just a warning sign at this stage, MM says it shouldn’t be ignored, especially when it’s hard to imagine the macro-backdrop significantly improving from here for the sector.

“However, as we often say, trends have a habit of stretching far longer than people expect, which was again illustrated by the tech-based NASDAQ posting fresh all-time highs on Friday.”

Finally, Nvidia might be correcting a bit as far as NVDA stock goes (which is usually up) but that could change after fresh forecasts suggest it’ll make some US$12bn from selling GPUs into China this year – an impressive figure especially considering US trade sanctions should be smashing NVDA’s entire China market.

NVDA’s  been a focus for Washington’s crackdown on AI in China, amid fears that its cutting-edge AI would be a huge boost for Beijing’s military ambitions.

According to the latest data from research firm SemiAnalysis, Nvidia is set to ship over a million of its snazzy new H20 GPUs to China, each said to go for as much as US$13k apiece.

 

Elon Watch

In some really good news for X-owner Elon, he can now report that his very own X-post (a ‘tweet’ in the old parlance) which teased, mocked and kinda bullied rival billionaire Mark The Zuck’s Meta’s not working servers has been declared the most-liked x-post (or tweet) so far this year.

 

Our X-owning (and Zuck-owning) billionaire reportedly beat out football billionaire Cristiano Ronaldo and pop billionaire Taylor Swift for the not-very-coveted title. I mean, why get excited about the tweet of the year, half way through the year?

Unless you own the tweets. And need some good press.

At the start of last week, Tesla stock was one of the worst performers in the S&P 500.

It is not any more.

In truth, the really, really good press for Elon followed twin Tesla deliveries updates last week.

TSLA beat market expectations, making some analysts and shareholders literally explode in joy.

 

“In a nutshell, the worst is in the rear view mirror for Tesla as we believe the EV demand story is starting to return to the disruptive tech stalwart ahead of a historical Robotaxi Day on August 8th,” says noted TSLA bull, Wedbush Securities analyst Dan Ives.

Ives added that the strong results will be music to the ears of Elon and loopy Elon-backer ARK Invest Management’s Cathie Wood.

Cathie still believes that by 2029, Tesla stock will be up about 1,400% to US$2,600 per share. That’s a prediction almost entirely based on TSLA’s non-existent robotaxis.

The EV maker accelerated by more than 16% on the day and then 27% for the week entire.

That was enough to make up for all of its slow burn losses accrued over 2024 so far. Tesla shares have jumped around 75% in the past eight weeks.

According to data firm S3 Partners, TSLA short sellers lost more than US$3.5bn last week.

Moreover, the report says that short interest in Tesla stock currently stands at 3.5%, or 97 million shares shorted, with a notional value of $22.4 billion.

“Once Tesla fully solves autonomy and has Optimus in volume production,” Musk wrote on X, “anyone still holding a short position will be obliterated.

And just in, more good news for Elon out of Australia.

Just released: 1H EV sales in Australia:

  1. Tesla Model Y: 12,516
  2. Tesla Model 3: 10,600
  3. BYD Seal: 4092
  4. BYD Atto 3: 3726
  5. MG4: 2771
  6. BYD Dolphin: 1248
  7. BMW iX1: 1237
  8. BMW i4: 1177
  9. Kia EV6: 1060
  10. Volvo EX30: 1001
  11. Polestar 2: 930

 

US Q2 Earnings

The Wall Street focus shifts to Q2 earnings.

Josh Gilbert says the current projections have the S&P 500 reporting double-digit earnings growth in 2024 but for that to come to reality, Q2 earnings will need to impress.

Markets expect to see 8.5% earnings growth year-over-year, with eight of the 11 sectors set to see year-on-year growth, led by Communication Services, Technology, Healthcare and Energy.

We’ll once again see investors looking to market darling Nvidia to deliver to reaffirm the AI boom is still in full swing.

But, as usual, financials get us underway alongside Pepsico and Delta Airlines.

According to Josh G, Delta is actually among the top stock fallers on the eToro platform globally for Q2, (with a 13% fall in holders over the quarter).

“Financials look set to post earnings growth of just over 4%, but banks specifically are set to see earnings decline by -10%. There will be a big focus on net interest margins, with interest rates still elevated and how the consumer is holding up, looking to any credit deterioration.”

Wall Street Q2 earnings highlights this week:

Monday

Greenbrier (GBX)

Tuesday

Helen of Troy (HELE), Kura Sushi (KRUS)

Wednesday

Manchester United (MANU), PriceSmart (PSMT)

Thursday

Delta Air Lines (DAL), PepsiCo (PEP), Conagra Brands (CAG)

Friday

Citigroup (C), JPMorgan Chase (JPM), Bank of New York Mellon (BK), Wells Fargo (WFC)

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