Markets News, April 5, 2024: Stocks Rise; Treasury Yields

Tesla Stock Unmoved by Musk’s Denial of Reportedly Canceled Entry-Level EV Plans

In afternoon trading on Friday, shares of Tesla (TSLA) fell by 4% as CEO Elon Musk posted on his social media platform X, “Reuters is lying (again)” in response to a Reuters report that the electric vehicle (EV) maker has abandoned its longstanding aim to develop a cheap automobile.23

For a long time now, Musk has stated that making affordable electric vehicles was Tesla’s ultimate goal. To produce a wide range of vehicles, including economically priced family automobiles, is our long-term strategy,” he said in the company’s 2006 Master strategy.

While speaking with analysts in January, Musk affirmed what Reuters had reported, saying that Tesla’s gigafactory in Texas will start producing its next-generation electric vehicle in the second half of 2025. Markets News Reuters reported that the upcoming Model 2 electric vehicle will start at around $25,000, which is around $14,000 less than its current entry-level model, the Model 3.

When asked for comment, Tesla did not immediately address the matter. Tesla shares have lost one-third of their value so far in 2024, and they were down 3.4% at $165.32 later in the session on Friday.

Fed’s Bowman Warns Hikes Could Still Be in the Cards; Markets Shrug

Federal Reserve Governor Michelle Bowman left the door open to additional rate hikes in her prepared remarks delivered at the Manhattan Institute in New York, citing the dangers of long-term inflation on the economy.

She noted that this is not her baseline forecast and that if inflation progresses no further or even reverses, it may be necessary to hike the policy rate at a later meeting.4

Although she acknowledged that inflation made some progress in the previous year, she said it was still too soon to determine if it would continue into 2024. The Federal Reserve was still far from being in an “appropriate” position to lower interest rates, she continued.

In a speech at Duke University, Dallas Fed President Lorie Logan characterized the inflation report for January as “disappointing” and the figures for February as “better,” but still not terrific. Bowman’s remarks mirrored her remarks.5

Interest rate cuts are something we shouldn’t consider just yet, in my opinion. For Logan to feel comfortable moving forward economically, he wants to see more of the unknowns clarified.

Wall Street paid little attention to Bowman’s remarks, which were among the most aggressive from a FOMC member this year. After a morning of gains, stocks have maintained most of those gains in afternoon trading, while Treasury rates have settled around 6 basis points higher than they began the day.

Uber Stock GetsBumpFromJefferies Price-Target Increase

Jefferies research analysts increased their price objective for Uber Technologies (UBER) stock from $95 to $100 on Friday. The analysts cited the company’s ongoing efforts to create new methods for users to utilize the app, especially in its Mobility segment, as the reason for the increase.

Analysts at Jefferies pointed out that there are currently over 20 ways for users to book trips on Uber, which is a significant improvement from the company’s early days when it only had a handful of Mobility options like Uber Black or UberX. This diversity of alternatives could help Uber attract more customers. Uber has enormous development potential because it is only 5% of the way into the ridesharing and food delivery sectors, which combined have addressable markets worth close to $1 trillion.

Friday afternoon saw a 4% increase in Uber shares to $77.81, continuing a 26% rise for the year and a 150% gain for the past 12 months.

Gold Hits New Record and Oil Climbs as Geopolitical Jitters Linger

Friday saw a record high for gold futures, even as Treasury yields increased in response to positive U.S. jobs data. Gold’s return on the year so far is now over 13%, as it traded Friday afternoon just below $2,350 per troy ounce. Rising geopolitical concerns have supported prices, prompting some investors to seek solace in conventional safe-haven commodities like Treasury paper and gold.

The possibility that Israel’s war in Gaza would spread and envelop the area in a larger confrontation has increased in light of the apparent Israeli airstrike on the Iranian embassy in Syria and Iran’s threat of retaliation. Markets News This has caused oil prices to soar, with Brent crude jumping above $91 a barrel today after surpassing $90 yesterday. This poses a threat to increase gas costs and accelerate inflation in the United States.

Contrary to common thinking, which holds that rising Treasury yields should have an impact on gold prices, which serve as a store of value but provide no return on investment, gold prices have surged. However, due to worries that the Fed’s efforts to combat inflation have faltered, gold has increased in value over the past month while yields have increased.

Acquires Shockwave Medical to Boost Its Cardiovascular Treatment Portfolio

Following the announcement on Friday that Johnson & Johnson (JNJ) will acquire Shockwave Medical (SWAV) for a cash sum of $13.1 billion, the stock of the manufacturer of cardiovascular catheters surged to almost all-time highs. Six

All of Shockwave’s outstanding shares are being acquired by J&J for $335 apiece, which represents a 4.7% premium over the shares’ closing price on Thursday. Markets News On March 26, Shockwave’s stock increased by 10% to $316 on news from the Wall Street Journal that the two businesses were in talks to close a deal.7.

Early on Friday afternoon, Shockwave shares saw a 2% increase to $326.44, extending their gains for the year to almost 71%. The J&J stock saw no movement and is now down roughly 3% for the year.

GE Aerospace, Separated From Energy Business, Takes Off

The remaining stock of a split General Electric, known as GE Aerospace (GE), soared on Friday, pushing aside shares of its energy division.

After rising more than 5% in the three days following its separation from General Electric’s energy division, GE Vernova (GEV), GE Aerospace shares were up over 5% at midday on Friday. The performance of the stock contrasts sharply with that of Vernova, which closed at $125.10 at midday on Friday, over 13% below its opening price of $142.85 on the company’s first trading day on Tuesday.

Before the split on Tuesday, GE shares increased by more than 83%. GE Aerospace might be gaining from that momentum now that it has kept the “GE” ticker. The idea that the stock is the company that investors invested in, despite keeping the historical ticker, might also help the stock.

But business principles are probably also in play here. In the last quarter of 2023, GE Aerospace recorded a $1.6 billion profit on a 10% increase in revenue. While income from renewable energy increased by 23%, GE Vernova nonetheless had a $347 million loss. Markets News Its power division reported $759 million in profit.8

Western Digital Receives Analyst Upgrade on Projected Memory Chip Growth

In early trading on Friday, shares of Western Digital (WDC) increased sharply before retreating somewhat after Rosenblatt lifted its price target and upgraded its stock, citing increased demand for the company’s flash memory chips.

Rosenblatt analyst Kevin Cassidy stated that Western Digital’s price target of $115 from $65, along with an upgrade to “buy” from “neutral,” might benefit the company from an anticipated increase in industry prices for the memory chips it manufactures.

“Our upgrade of WDC to a Buy recommendation is anchored on the strengthening NAND Flash market, with expected 15%+ sequential price increases in 2Q24, driven by rising demand, low inventories, and controlled capacity,” Cassidy stated.

On Friday morning, Western Digital’s stock saw a 2% increase before somewhat retreating from its gains. By late Friday morning, they had increased by 1.4% to $71.55. The value of shares has more than doubled over the past 12 months, and they are up almost 47% so far this year.

Apple Stock in Focus After Announcing First Major Headcount Cut Since Pandemic

After the iPhone manufacturer said late Thursday through state regulatory filings that it had cut more than 600 jobs in California, the tech giant’s first significant headcount reduction since the epidemic, Apple (AAPL) shares increased somewhat in early trade on Friday.

Sixteen employees were let go from Apple’s next-generation screen development facility, its main car- office in Santa Clara, and its smaller satellite offices—likely kept under wraps to protect the company’s top-secret projects—according to eight documents that Bloomberg said were with the California Employment Development Department.9.

Apple has reduced its global workforce this year in a post-pandemic labor realignment amid uncertainties over the macroeconomic outlook, following other mega-cap tech businesses in the same move.

Between July and December of last year, the price of Apple’s shares formed two separate peaks, suggesting that the stock may be forming a broad double-top pattern. Furthermore, last month saw the formation of a death cross, a bearish chart indicator that frequently precedes a fresh downtrend, when the 50-day moving average crossed below the 200-day moving average.

Investors should keep a close eye on the pattern’s neckline, which is currently at $166.50, going forward. Markets News The double top would be confirmed by a breakdown below this carefully monitored level, which would pave the way for additional short-term declines.