July 1st Market Overview

Market brief for July 1st, 2024

Author

J.L. Bernstein
July 01, 2024

What a Monday, I hope everyone is looking forward to the short holiday week as much as I am. Lets dig in…

Executive Summary

  • US markets are trading flat premarket with the SPX, Nasdaq, and Dow Jones showing minimal movement.

  • Significant corporate moves include AMZN's $100B data center investment and TSLA's addition to Wells Fargo's Tactical Bear List.

  • Chinese economy showing mixed signals with uneven manufacturing data.

  • Europe's markets influenced by political developments and PMI numbers, with French markets reacting to far-right party's performance.

Market Overview

  • SPX: Flat in premarket, trading between 5460 and 5480.

  • Nasdaq: Trading flat at 19730.

  • Dow Jones: Steady trading at 39,200.

  • Oil: Trading flat at $81.70, consolidating near highs looking for breakout today.

  • Other Markets: Mixed movement in European and Asian markets, with political and economic data influencing trends.

Key Market Drivers

  1. Chinese Economic Data: Official NBS manufacturing PMI remained below 50, indicating contraction, while Caixin manufacturing PMI came in at 51.8, showing expansion.

  2. US ISM Manufacturing PMI: Upcoming data expected, contributing to cautious market sentiment.

  3. Shortened Trading Week: Due to the upcoming holiday, traders should expect continued volatility.

Stock Spotlight

  1. Tesla (TSLA): Added to Wells Fargo's Tactical Bear List with an underweight rating and a $120 price target. Analysts cite declining delivery growth and expected gross margin compression.

  2. NIO: Delivered 21,209 vehicles in June, up 98% YOY, setting a new monthly record. Q2 deliveries reached 57,400, up 143% YOY.

  3. Li Auto (LI): Reported 47,774 vehicle deliveries in June, up 45% YOY and 36% MOM, reclaiming the top spot among Chinese NEV makers.

  4. Snowflake (SNOW): Added to Goldman Sachs' Conviction List with a Buy rating and a $220 price target, citing an attractive entry point.

  5. Chewy (CHWY): Roaring Kitty (Keith Gill) filed an SEC 13G, disclosing a 6.6% stake in the company with 9 million shares.

Other Magnificent 7 Updates

  • Amazon (AMZN): Plans to invest over $100 billion in data centers over the next decade, focusing on AI and cloud computing.

  • Meta (META): Charged by EU antitrust regulators for non-compliance with tech rules over its pay-or-consent ad model.

  • Nvidia (NVDA): Morgan Stanley raises price target to $144 from $116, citing strong demand and robust H20 builds.

  • Apple (AAPL): Expanding orders for A18 chips for iPhone 16, planning for 90-100 million units. Needham reiterates Buy rating with a $220 price target.

Other Notable Company News

  • Boeing (BA): DOJ seeking guilty plea on fraud charges; agrees to acquire Spirit Aerosystems for $4.7 billion in all-stock deal.

  • Walt Disney (DIS): "Inside Out 2" surpasses $1 billion at the global box office, the first 2024 film to reach this milestone.

  • Walmart (WMT): Deutsche Bank raises price target to $77 from $71, citing higher-income consumers shopping at Walmart.

  • Micron (MU): Down on news that South Korea’s SK Hynix plans to invest $75 billion through 2028 on AI and HBM chips.

Sector Watch

  • Semiconductor Sector: Rumors of TSM increasing 2025 Capex to $36 billion due to higher R&D spending and strong 2nm demand. Beneficiaries are expected to include ASML and Applied Materials.

  • EV Sector: Strong delivery numbers from Chinese manufacturers indicating potential growth.

Key Levels to Watch

SPX

  • Current Level: 5468

  • Resistance Levels: 5523, 5510, 5500 (strong resistance), 5490-5495

  • Support Levels: 5475 (stronger level), 5460-5462 (pivot level), 5445-5450 (strong support), 5435 (minimum), 5425 (unlikely)

  • Thoughts: Expectation was a relatively choppy day. 5460 is the key pivot level. Below this, expect volatility to the downside; above it, bulls remain in control.

QQQ

  • Key Levels:

    • 486.74 (strong maximum), 485, 484, 483.2-483.5, 482.5, 480.8-481, 480 (key pivot level)

    • Support: 479, 477, 476.5 (minimum), 474.7-475, 473

VIX

  • Key Level to Watch: 13.8 – Above this level, hedging will slow down on the short side of VIX.

Bond Market

  • No treasury auctions scheduled for this week. Bonds remain stable

Policy Watch

  • US Politics: Half of Democratic voters express a desire for Biden to step aside, reflecting political uncertainty.

  • 36% of Americans plan to take on debt for summer travel. So whilst spending remains strong, we see increase of cracks under the surface. Delinquency rates worth looking at..

Note: This newsletter is intended for informational purposes only. Always perform your own research and consult with a financial advisor before making any investment decisions.