Early Look

Monday, July 3, 2023

S&P futures (Spuz) at the overnight high 4,493, but in very tight 8-point range (4,485 low) ahead of the early 1:00 PM ET close in the US ahead of tomorrow’s holiday (market closed tomorrow for 4th of July). Early strength in the electric vehicle sector, led by gains in Tesla (TSLA) after posting better-than-expected quarterly EV deliveries. Shares of China EV makers LI, NIO, XPEV also trading higher on June vehicle delivery data. Oil reversed losses to rally as Saudi Arabia and Russia extended oil supply cuts. Gold prices are lower to start, while Treasury yields move higher. U.S. stocks closed higher Friday, ending the month strong and the first half of 2023 with robust gains as a long anticipated economic recession failed to materialize. The Dow Jones Industrial Average gained 4.6% in June and 3.8% in the last six months, its best first half since 2021. Stocks have been in rally mode in 2023 as inflation continued to retreat under a regime of sharply higher interest rates. The S&P 500 index rose 2.3% in June and 15.9% in the first half, its best start to a year since 2019. The Nasdaq Composite Index was the standout, gaining 1 31.7% in the first half of 2023, which was its best first half since 1983. In Asian markets, The Nikkei Index jumped 564 points to 33,753, the Shanghai Index gained 41 points to 3,243, and the Hang Seng Index jumped 390 points to 19,306. In Europe, the German DAX is up 20 points to 16,168, while the FTSE 100 rose 21 points to 7,52. Reminder US stock markets closed at 1:00 PM ahead of the 4^th of July holiday tomorrow where markets will be closed.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 53.94 points, or 1.23%, to 4,450.38.

·     The Dow Jones Industrial Average rose 285.18 points, or 0.84%, to 34,407.60.

·     The Nasdaq Composite surged 196.59 points, or 1.45%, to 13,787.92.

·     The Russell 2000 Index advanced 7.14 points, or 0.38% to 1,888.73.

Economic Calendar for Today

·     9:45 AM ET                  S&P Global Manufacturing PMI, June-F

·     10:00 AM ET                Construction Spending M/M for May…est. +0.5%

·     10:00 AM ET                ISM Manufacturing Index for June…est. 47.0

Sector News Breakdown

Consumer

·     Tesla (TSLA) delivered 466,140 vehicles in the three months ended June 30 and produced 479,700 vehicles (+85.5% y/y), the 5^th period in a row when Tesla reported a higher level of vehicles produced compared to deliveries (Refinitiv estimate was for 445,000 vehicles). Tesla delivered 254,695 vehicles in the year-ago quarter. TSLA delivered 446,915 Model 3 compact cars and Model Y sport-utility vehicles, as well as 19,225 of its Model S & Model X premium vehicles.

·     Li Auto (LI) said it delivered 32,575 vehicles in June, topping the 30,000 monthly delivery mark for the first time and representing an increase of 150.1% Y/Y and brought Q2 deliveries to 86,533, up 201.6% Y/Y.

·     Nio (NIO) said delivered 10,707 vehicles in June 2023 (6,383 premium smart electric SUVs, and 4,324 premium smart electric sedans) and delivered 23,520 vehicles in Q2. Cumulative deliveries of Nio vehicles reached 344,117 as of June 30, 2023.

·     XPeng (XPEV) delivered 8,620 Smart EVs in June, rising 15% M/M, with the P7 series deliveries +17% M/M; said total Smart EV deliveries rose 27% Q/Q for Q2 at 23,205 units, and has delivered over 300,000 Smart EVs at end of June.

Energy, Industrials and Materials

·     Rockwell Automation (ROK) mentioned positively in Barron’s saying the company, which competes with the likes of Siemens (SIEGY) and ABB, is a leader in the automation and digital transformation of manufacturing processes. Companies making everything from cars to cookies use Rockwell hardware and software to make their plants function.

·     WTI Crude oil +0.9% pre mkt after oil exporters Saudi Arabia and Russia said they would extend voluntary oil output cuts of one million barrels per day (bpd) for another month to include August, adding that the cut could be extended beyond that month. Shortly after the Saudi announcement, Russian Deputy Prime Minister Alexander Novak said Moscow would cut its oil exports by 500,000 barrels per day in August.

Financials

·     Goldman Sachs (GS) is considering exiting its partnership with Apple (AAPL), according to a report in the WSJ late Friday afternoon and is in talks with American Express (AXP) to take over its Apple credit card and other ventures with the tech giant. https://tinyurl.com/3a76jvhz

·     Real estate stocks mentioned positively in Barron’s this weekend calling many of them “bargains”. Article nots offices are now just 3.4% of the $1 trillion public market for real estate investment trusts, or REITs, and the broader REIT space isn’t as troubled, noting shares of AVB, EQR, DLR, EQIX, FR, SPG, PEAK, KIM, CUZ, and HIW are weathering the downturn and could be winners as conditions improve.

·     Sofi (SOFI), Navient (NAVI): Millions of student loan borrowers are now preparing to pay back their debt without President Joe Biden’s forgiveness plan. The Supreme Court tossed out the president’s relief program, which would’ve wiped out as much as $20,000 per borrower.

·     Buyout groups weigh bids for majority stake in FIS-owned Worldpay – FT https://tinyurl.com/5n7svj7z

·     Citigroup Inc. (C) board of directors approved a plan to increase its quarterly dividend to 53 cents a share from 51 cents.

·     Goldman Sachs Group Inc. (GS) said it plans to boost its quarterly dividend 10% to $2.75 share from $2.50.

·     JPMorgan Chase & Co. (JPM) said it plans to boost its quarterly common stock dividend to $1.05 per share beginning in Q3.

·     Morgan Stanley (MS) said it plans to increase its quarterly common stock dividend to 85 cents a share from 77.5 cents a share, starting in Q3.

·     Wells Fargo & Co. (WFC) said it expects to boost its Q3 dividend to $0.35 from $0.30.

Healthcare

·     AstraZeneca (AZN) shares down -5% pre mkt after saying its experimental precision drug, datopotamab, jointly developed with Japan’s Daiichi Sankyo slowed progression of lung cancer in a late stage trial but said the trial will continue to assess the dual primary endpoint of overall survival. Analysts note the company did not quantify the progression-free benefit.