Wall Street Lunch: EVs Dominate Shortened Trading Day

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This is an abridged transcript of the podcast.

This is a special edition of Wall Street Lunch, with New York trading closing early before Independence Day. First, let’s take a look at how stocks are doing heading into the 1 p.m. finish.

Moves have been subdued all day. The S&P 500 (SP500), Nasdaq (COMP.IND) and Dow (DJI) are up slightly. (S&P closed up 0.1%, the Nasdaq finished up 0.2% and the Dow ticked 11 points.)

Consumer Discretionary (XLY) is the best-performing S&P sector, while Health Care (XLV) is the weakest.

June ISM Manufacturing fell more than expected, down to 46, the lowest level since May 2020. That marks eight-straight months of contraction in the manufacturing sector after 30 months of expansion.

Among the components, new orders topped estimates, while employment fell more than expected. Prices also came in lower than forecast.

Wells Fargo said a scan through selected industry comments “suggests things are a little less dire” than at first blush, noting most “industries reference stable demand and steady business activity.”

Also in manufacturing, the June S&P Global PMI came in right at consensus at 46.3. And May construction spending rose 0.9%, more than anticipated.

The 10-year Treasury (US10Y) edged up to around 3.85%.

Gold (XAUUSD:CUR) and Bitcoin (BTC-USD) were up.

Among active names, Rivian Automotive (RIVN) jumped after announcing it produced 13,992 vehicles at its manufacturing facility in Normal, Illinois in Q2. It also delivered 12,640 vehicles, topping the consensus of 11,300. Crucially, the EV maker said it believes it is on track to make good on its guidance for annual production of 50,000.

Tesla (TSLA) also rallied on deliveries, while Canoo (GOEV) and Workhorse Group (WKHS) saw gains.

Meanwhile, AstraZeneca (AZN) reported mixed results from a Phase 3 clinical trial for a treatment of advanced lung cancer, pushing shares down sharply.

In other news of note, in a transatlantic dispute, it’s Barbie vs. Burberry.

Mattel (MAT) is in a legal battle with Burberry Group (OTCPK:BURBY) over the fashion company's efforts to trademark "BRBY" for a line of clothing, bags, and other products.

In a filing with the U.S. Trademark Office, Mattel claimed the BRBY mark would mislead consumers into associating the products with Barbie dolls and related merchandise.

The toy company says that its own Barbie trademark is one of the most recognizable brands in the world, widely known in many fields outside of the dolls category. The trademark is noted to broadly cover clothing, jewelry, cosmetics, and the live-action Barbie movie, which opens later this month.

Moving to another potential iconic battle, reports say Elon Musk vs. Mark Zuckerberg could happen as soon as August.

Over the past 10 days, Musk and Zuckerberg have been negotiating over a cage match and are getting closer to an agreement, the New York Times reported, citing Dana White, president of the UFC. They have also agreed that the match should have a charity component.

Both parties were looking at a fight in the fall, but a match could come as soon as next month, according to CNBC.

In the Wall Street Research Corner –

Stocks ended June on a high note, cementing a gain of more than 16% for the S&P 500 (SPY) (IVV) (VOO). But could that jinx returns for the second half of the year?

BMO strategist Brian Belski writes that a gain of 10% to 15% in the first six months is the “sweet spot” for gains for the rest of the year. Since 1950 there have been 13 times that the S&P has notched first-half returns of 10% to 15% and every time the market has also gained in the second half.

For 2023, gains last Thursday and Friday nudged performance out of that range. Before that, the S&P was looking at a rally of about 14%, which historically has led to double-digit second half returns. Belski has a year-end target of 4,550 for the S&P.

In addition, BofA released its top 10 stock picks for the third quarter. Among the names are Disney (DIS), Netflix (NFLX), and Datadog (DDOG).

Overall, BofA strategist Michael Hartnett is still bearish but says the “pain trade is higher” near term. Technical strategist Stephen Suttmeier says charts suggest an S&P level of 4,900 to 5,000.