The Dow rose strongly in morning trade, along with the S&P 500 and Nasdaq Composite, indicating a market recovery after major indexes slumped last week to their worst levels since late 2020. Yields on Treasury bonds and crude oil futures rose, while Bitcoin has rebounded from a sharp level. Weekend drop.
The CEO of electric car giant Tesla said Tuesday that the company will cut 10% of its paid jobs over the next three months. Meanwhile, Chinese EV competitor Li Auto is set to unveil a new hybrid sports car, the L9, on Tuesday. Exping (XPEV) indicates a strong rebound in deliveries in June, as the recent end of China’s Covid lockdown and new electric vehicle subsidies is good news for Xpeng as well as Li Auto, New (NIO) and Tesla.
Tesla stock jumped shortly after the open, having nearly pared its lows in late May last week. Li Auto, Xpeng and Nio stocks were headed for solid gains, continuing a solid rebound. China EV and battery giant BYD (BYDDF), which hit record car sales in April and May despite China Covid restrictions, is yet to be traded. But BYD stock has a new handle buy point Just below the standard highs in a deep base.
The Kellogg Company has split into three companies
Kellogg said early Tuesday that it will split into three independent companies, focusing on global snacks, American grains and plant-based products.
Kellogg stock jumped 2% to 68.88, below the 50-day line after briefly bouncing above the 50-day moving average and breaking the downward sloping trendline. Kellogg stock has 75.76 buy points in flat base formed above a double bottom base.
snack giant Mondelez (MDLZ) will buy energy company Clif Bar for $2.9 billion. MDLZ stock is down.
Dow Jones today
The Dow Jones index jumped 1.7%. The S&P 500 jumped 2.4% and the Nasdaq gained 3%.
The Dow Jones Industrial Average fell 4.8% last week stock market trading. The S&P 500 fell 5.8%. The Nasdaq Composite Index fell 4.8%.
The 10-year Treasury yield gained 5 basis points to 3.29%. The benchmark yield rose 8 basis points to 3.24% last week, but has eased from an 11-year high of 3.48%.
Crude oil prices rose 2%, pushing West Texas Intermediate crude futures above $110 a barrel. West Texas Intermediate crude fell more than 9% last week to $109.56 a barrel, dragging down oil inventories.
Bitcoin moved above $21,000 after crashing to an 18-month low of $1,701.58 on Saturday.
Ahead of the opening, Lennar reported better-than-expected earnings and revenue during the second quarter. Earnings per share jumped 59% with revenue up 30%. It comes at a time when soaring mortgage rates seem to be chilling the demand for housing. Linar shares rose 4%.
At 10 a.m. ET, the National Association of Realtors reported that existing home sales in May fell 3.4% to an annual rate of 5.41 million, but that was better than expected. later this week, KB Home (KBH) will report quarterly results with the Commerce Department releasing new home sales data for May on Friday.
JetBlue UPS Spirit Airlines again
Jet Blue (JBLU) raised her offer to Spirit Airlines (save) again, to $33.50 per share, up from $31.50 per share. The Spirit Air panel is suspended by its backing for a width far less than Frontier Air (ULCC), saying regulators would likely block the JetBlue-Spirit deal. Shareholders will vote on the Frontier-Spirit Agreement on June 30.
JBLU stock is up. SAVE stock jumped nearly 8% to nearly 23. Frontier Air was up 3%.
Diamondback dividend increase
Diamondback Energy raised its quarterly dividend by 7% to 75 cents a share, starting in the second quarter. The shale operator also agreed to return at least 75% of free cash flow to shareholders starting in the third quarter against its previous pledge of at least 50% of free cash flow. FANG stock is up 7%.
Tesla job cuts
Elon Musk said in the Qatari capital, Doha, on Tuesday that Tesla will cut 10% of paid employees over three months, predicting a recession likely in the near term. But production workers must be increased hourly, he said.
Jobs have already been cut over the past week or so. Two former Tesla employees who were fired this month sued the US EV giant on Sunday, saying they were not given 60 days’ notice under federal rules for mass layoffs.
Musk said supply chain problems are Tesla’s biggest concern. While supply issues may have limited Tesla’s production growth somewhat in the past year, they have had a devastating effect on the auto industry’s overall production. Ending chip shortages could lead to a surge in industrial production, particularly in electric vehicles, putting pressure on prices for Tesla and other automakers.
Tesla stock jumped 8%. TSLA stock fell 6.7% last week to 650.28, breaking its lows in late May.
China EV . makers
Li Auto will unveil the L9 later today. It promises to be a more upscale SUV hybrid than the current Li One Li model. L9 deliveries will begin in August, with Li Auto expecting L9 shipments to reach 10,000 by September.
LI stock is running IBD Leaderboard.
Last week, Nio unveiled the ES7, an all-electric SUV and one of three new electric vehicles launched this year.
Xpeng said it has delivered 200,000 cumulative electric vehicles. This means that it has delivered at least 8,359 vehicles in June so far.
Xpeng delivered 10,125 vehicles throughout May, recovering from the COVID-19 outbreak in April but still well below recent record levels.
All three China EV startups could be on track to achieve monthly sales of 20,000 or more later this year, assuming there are no major production or supply chain issues.
Meanwhile, electric car giant BYD, which has been slightly affected by China’s Covid lockdown, may be on track to achieve monthly sales of 200,000 or more by the end of the year. Sales of BYD EV and plug-in hybrids will easily outpace Tesla EV sales only in the second quarter.
It was BYD on Friday IBD stock today
China EV . Stock
Li Auto stock jumped 9%. Stocks have risen for six straight weeks, racing upwards to the right side of a very deep consolidation. The official point of purchase is 37.55, but the LI stock could use a long handle.
The Relative force line Li Auto stock has soared near record highs in late 2020.
Nio’s stock jumped 9%. XPEV stock gained 6%. Both have rebounded strongly in the past few weeks, but remain well below the 200-day moving averages.
BYD stock advanced nearly 3% to 38.46. Shares fell 4.1% last week to 37.45, ending a five-week winning streak. This resulted in a weekly handle forming on its 48% deep base with 39.81 buying points, according to MarketSmith Analysis. Stocks were inactive early Tuesday.
Even if the major indices opened higher and closed with solid gains, it would be the second day to attempt a stock market rally for the S&P 500 and Nasdaq, and the first day for the Dow industrial index.
Investors will want to see more strength, including a Follow-up day To confirm the new uptrend, before exiting the sidelines. Even then, there shouldn’t be a crazy scramble to increase exposure, especially with not many stocks in a position to buy.
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