S&P 500, Nasdaq Hit Highs As Megacap Techs Thrive

The stock market rally continued higher for the week, with the S&P 500 and Nasdaq hitting fresh all-time highs and the Dow also rising solidly. Facebook hit $1 trillion on two antitrust wins, while some other megacap techs had strong weeks. Tesla (TSLA) global deliveries topped 200,000 in Q2, while China EV rivals Nio (NIO), Xpeng (XPEV) and Li Auto (LI) reported strong sales. All four stocks rose for the week, but are still off highs. Gene-editing stocks soared on a breakthrough from Intellia Therapeutics (NTLA).

Micron Technology (MU) reported strong earnings and guidance, but the chip giant fell on costly capital spending plans. United Airlines (UAL) announced a record jet order. Crude oil prices hit fresh three-year highs, while OPEC+ debated a modest output hike. Didi Global (DIDI) headlined a big week for IPOs.


Stock Market Rally Continues

The Dow Jones, S&P 500 and Nasdaq composite all rose solidly for the week, with the latter two setting record highs yet again. The Russell 2000 retreated, while many growth stocks that had raced up recently sold off late in the week. That included EV makers Nio (NIO) and Xpeng (XPEV), but also shipping firms, China-related names and many more. But Facebook, Microsoft (MSFT) and Google parent Alphabet (GOOGL) hit record highs, while Apple (AAPL) broke out of a base.

Job Growth Picks Up

The U.S. economy added a stronger-than-expected 850,000 jobs in June, the best monthly gain since August, but the unemployment rate unexpectedly ticked up to 5.9%. Meanwhile, pockets of super-strong wage growth continued for sectors recovering from the pandemic. Average hourly pay jumped 2.3% over the prior month among nonsupervisory workers in the leisure and hospitality sector. That brought the three-month pay increase to 6.2%.

The June employment report data, which come from mid-month surveys of employers and households, only partly reflect ongoing moves by about 25 states to coax workers back into the job market by ending emergency benefits that have provided an extra $300 per week.

The July jobs report could be a strong one. Initial jobless claims eased to a Covid-era low of 364,000 in the week through June 26.

Meanwhile, the Institute for Supply Management’s manufacturing index eased to a still-robust 60.6 in June from 61. The institute said that firms are still dealing with short-term shutdowns due to parts shortages and capacity issues due to staffing challenges. But new orders remained very high, production ramped up and inventories weren’t quite as tight.

Facebook Hits $1 Trillion On Antitrust Wins

Facebook (FB) jumped to a record high in the stock market, and its market valuation topped $1 billion for the first time after a U.S. District judge dismissed two antitrust lawsuits, one by the Federal Trade Commission and the other by a coalition of states alleging anticompetitive practices. The lawsuits alleged that Facebook’s acquisition of Instagram and WhatsApp showed a pattern of monopolistic behavior. The judge said the FTC’s complaint was too vague and failed to prove Facebook has monopoly power. The FTC can amend and refile.

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CRISPR Stocks Soar On Gene-Editing Breakthrough

Shares of CRISPR stocks popped on Monday after Intellia Therapeutics (NTLA) said its gene-editing approach to a liver disease showed promise in a Phase 1 test. Researchers tested a single dose of the drug in patients with a disorder caused by abnormal protein build-up. After 28 days patients showed a marked reduction in that protein. The news is important because it’s the first time a company has tested a gene-editing drug inside humans, rather than on extracted cells before they’re reinfused. In vivo gene-editing could be less expensive, easier to do and more versatile. NTLA shot up about 85% for the week. Crispr Therapeutics (CRSP) gained more than 8% in the stock market.

Stock Market IPO Activity Booms

A whopping 17 companies held initial public offerings this past week, making Q2 the most active quarter for IPOs since 2000. The second quarter had 113 IPOs that raised $39.9 billion, said Renaissance Capital. The largest was the $4.4 billion raised by Didi Global (DIDI) with a market valuation above $67 billion. Late in the week, China opened a cybersecurity probe into Didi, knocking shares down. Cybersecurity firm SentinelOne (S) raised $1.2 billion, with a valuation of $9 billion. raised $535 million and was valued at $5.8 billion. Krispy Kreme (DNUT) raised $500 million as it priced low in its range then rallied in its debut.

Tesla Deliveries Hit New High

Tesla (TSLA) delivered 201,250 electric vehicles in Q2, up from the prior record of 184,800 in Q1 and 90,900 a year ago. That was roughly in line with estimates. Tesla produced 206,421 vehicles, including 204,081 Model 3 and Model Y EVs, and 2,340 Model S and X vehicles. TSLA stock was little changed on Friday, up modestly for the week in the stock market.

China EV Sales Strong

China’s Nio (NIO) more than doubled EV deliveries in June and the second quarter, despite the global chip shortage. Rival EV startup Xpeng Motors (XPEV) more than quadrupled June and Q2 EV sales. Nio’s deliveries also rose in June vs. May, returning to growth on a month-over-month basis. In Q2, Nio sold 21,896 electric SUVs, up 112% and at the higher end of its target range. Xpeng sold 17,398 EVs last quarter, up 439%, driven by the popularity of its autonomous highway driving solution with China’s tech-savvy car buyers. It backed a goal to bring a third new EV, the P5, to market in Q4. Nio’s EC6 competes with the Tesla (TSLA) Model Y crossover, and Xpeng’s P7 with the Tesla Model 3 sedan. Li Auto reported June deliveries of 7,713 Li One SUVs, up 78.4% vs. May and 321% vs. a year earlier. Second-quarter deliveries hit 17,575, up 166% vs. a year earlier and far above the company’s target for 14,500-15,500.

Nio, Xpeng and Li Auto jumped early in the week, but later slashed gains.

U.S. Auto Sales

In Q2, General Motors (GM) grew U.S. auto sales 40%, reflecting easy comparisons vs. the year-ago, pandemic-hit quarter. GM sold 688,236 vehicles last quarter on the back of strong truck demand, which offset low inventories from the chip shortage. Bolt EV sales jumped 351% in Q2, after GM launched a refreshed Bolt and new Bolt compact SUV. Global automakers are making an ambitious and costly shift to electric vehicles, making EV sales key. By 2035, GM plans to only sell zero-emission vehicles. Ford (F) said Q2 sales fell 26.9% to 115,789, as chip shortages forced major plant shutdowns during the quarter. Electric and hybrid sales soared. Volkswagen (VWAGY) reported a 72% sales gain vs. a year earlier, with ID. 4 electric crossover sales ramping up in Q4. The annualized rate for U.S. auto sales will reach 15.8 million units in June, J.D. Power estimated. That would be up 2.6 million units from pandemic-hit June 2020 but down from 17.1 million units in both May 2021 and June 2019.

United Airlines Announces Huge Jet Order

United Airlines (UAL) announced that it will buy 200 Boeing (BA) 737 Max jets and 75 Airbus (EADSY) 321neo aircraft in the biggest single order by any carrier in at least a decade. The carrier expects to add 25,000 union jobs, including pilots, attendants and mechanics, for the new jets. Earlier in the week, reports said the FAA likely won’t certify Boeing’s 777X jet until at least mid-2023. Boeing fell on the 777x news, as well as weakness in travel-related stocks.

Micron Earnings, Outlook Beat Views

Micron Technology (MU) earnings leapt 129% a share while revenue climbed 36% to $7.42 billion, both beating fiscal Q3 targets. The memory-chip giant also guided higher for the current Q4. Micron expects DRAM and NAND chip supplies to remain tight into 2022, which should allow Micron to raise prices. Micron said its capital expenditures will rise to the mid-30% range as a percentage of revenue in fiscal 2022, up from a prior forecast of the low 30% range. It’s buying extreme ultraviolet lithography equipment from ASML (ASML) to make its next-generation chips. But Micron, ASML and other chip-gear makers fell Thursday.

Intel (INTC) delayed production of its next-generation Xeon data center processors by about one quarter to Q1 2022. Intel stock fell while rival AMD (AMD) rose.

Banks Hike Payouts

The nation’s largest banks raised their payouts to investors after clearing the Federal Reserve’s annual stress test last month. JPMorgan Chase (JPM) said it’ll hike its quarterly dividend to $1 per share, from 90 cents, for Q3. Bank of America (BAC) said it planned a 17% quarterly-dividend hike to 21 cents. Morgan Stanley (MS) said it would double its quarterly dividend to 70 cents and announced a buyback of up to $12 billion over the next year. Goldman Sachs (GS) said it would raise its dividend to $2 per share from $1.25.

Novocure (NVCR) tumbled in the stock market on disappointing trial results for its liver cancer treatment. Patients who reached 12 weeks of treatment with the company’s anticancer medical device and chemotherapy had an 18% objective response rate.

Jefferies Financial (JEF) reported Q2 EPS surged 714% to $1.30, well above estimates for 86 cents. Sales soared 70% to $1.95 billion, beating views for $1.56 billion.


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