Nio stock surged in premarket trade on Monday after the Chinese electric vehicle maker said it’s received a $2.2 billion investment from an Abu Dhabi investor.
Terms call for CYVN to invest $2.2 billion for 294 million shares at $7.50 each. Nio stock closed Friday at $7.98.
Nio’s U.S.-listed shares NIO, +1.53%
jumped 8% to $8.64 in premarket trade.
CYVN in July previously invested $738.5 million in Nio, as well as bought $350 million of shares in Nio from Tencent 700, -0.89%.
The new deal at closing will give the Abu Dhabi group a 20% stake in the EV maker that focuses on the high-end of the market, and will give it the right to nominate two directors.
“With the enhanced balance sheet, Nio is well prepared to sharpen brand positioning, bolster sales and service capabilities, and make long-term investment in core technologies to navigate the intensifying competitive landscape, while continually improving execution efficiency and system capabilities,” said William Li, founder, chairman and chief executive officer of Nio, in a statement.
Nio has been cutting jobs and reducing projects that aren’t making financial contributions, as it fends off a price war from rivals including Tesla TSLA, +0.98%.
Late on Wednesday, Tesla Inc. TSLA, -1.10%
reported that quarterly sales were up 47% from a year earlier. But the stock tumbled 10% on Thursday.
Tesla’s shares are still up 113% this year. The company is among a group of 13 in the S&P 500 that stand out with high growth expectations for sales, earnings and free cash flow through 2025.
But less than half of analysts polled by FactSet rate Tesla a buy. Emily Bary explains what they are worried about.
Chipotle Mexican Grill is among 14 stocks named by Michael Brush for consideration by investors looking to ride along with long-term improvement of U.S. labor productivity.
AP
The S&P 500 SPX, +0.03%
has returned 19% this year, following its 18% decline in 2022. On the same basis, with dividends reinvested, the benchmark index is still down 2% since the end of 2021.
The Dow Jones Industrial Average DJIA, +0.01%
is up 6% this year. The venerable index has trailed the S&P 500, but its closing level of 35,255.18 on Thursday was only 4% shy of its record close a 36,799.65 on Jan. 4, 2022. Joseph Adinolfi explains Dow Theory, which according to technical analysts is sending a strong bullish signal for the stock market.
Even if you have resisted the idea of a Roth IRA, you may soon be forced to have one
This year if you are age 50 or older and are already maxing-out your contribution to a 401(K), 403(B) or other qualified employer-sponsored tax-deferred retirement plan at $22,500, you can make an additional “catch up” tax deductible contribution of $7,500 for a total of $30,000. But starting in 2024, the catch up contribution will no longer be tax deductible if you earn at least $145,000 a year. You can still make the contribution with after-tax money into a Roth 401(K) account that your plan administrator may already have set up for you.
Shares of Meta Platforms Inc. and Alphabet Inc. trade only slightly higher than the S&P 500 on a forward price-to-earnings bases, while Nvidia Corp., Microsoft Corp. and Apple Inc. trade much higher.
FactSet
Leslie Albrecht looks at Meta Platforms Inc. META, -2.73%,
which is Facebook’s holding company and has a hit on its hands with the new Threads social-media platform, and Google holding company Alphabet Inc. GOOGL, +0.69%,
to consider which stock is a better buy.
In The Ratings Game column, MarketWatch reporters track analysts’ thoughts about various stocks. Here’s a sampling of this week’s coverage:
You don’t know every bad factor causing air travel to be nothing but harassment
Getting there is half the fun.
Getty Images
The U.S. flying scene — from shortages of equipment and labor (and runways) to ill-staffed air-traffic control towers — is a well-known nightmare for U.S. travelers. But there is more to the story. Jeremy Binckes looks into other factors that may surprise you and cause great inconvenience this summer.
The Federal Reserve is expected to raise interest rates again next week
The Federal Open Market Committee will meet next Tuesday and Wednesday, to be immediately followed by a policy announcement. Economists expect the central to raise the federal-funds rate by another quarter point. The question is whether or not this will end the Fed’s inflation-fighting rate cycle.
How much would you pay for 100% downside protection in the stock market?
MarketWatch illustration/iStockphoto
Over the past 30 years, the SPDR S&P 500 ETF Trust SPY,
has returned 1,650%, for an average annual return of 10%, with dividends reinvested, according to FactSet. But it hasn’t been a smooth ride. The ETF, which tracks the benchmark S&P 500, fell 18% last year and 37% during 2008, for example. And there have been even larger declines if the analysis isn’t confined to calendar years.
But can you ride through market declines? Many studies have shown that most investors who try to time the market sell after a decline has started and buy back in well after a recovery is under way, which means their long-term performance can suffer significantly.
In this week’s ETF Wrap column (and emailed newsletter), Isabel Wang describes a new buffered fund that can give you 100% downside protection over a two-year period, in return for a cap on your potential gains in the stock market. Here’s the price you would pay for the protection.
The World Cup games have started
Hannah Wilkinson scored the home team’s first goal against Norway during the first World Cup game in Auckland, New Zealand, on July 20.
Getty Images
The Women’s World Cup began Thursday with an upset victory by New Zealand over Norway.
James Rogers reports on what is expected to be a much easier environment for FIFA and corporate sponsors than that of last year’s Men’s World Cup in Qatar.
U.S. Soccer Federation President Cindy Parlow Cone participated in MarketWatch’s Best New Ideas in Money podcast and spoke about the long-term effort to achieve equal treatment for women soccer players.
More coverage of the World Cup:
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Shares of electric vehicle makers got a broad boost Monday, after upbeat delivery and production data from a host of companies, including industry leader Tesla Inc. and those based in China.
The Global X Autonomous and Electric Vehicles exchange-traded fund DRIV, +1.08%
jumped as much as 1.7% intraday, before paring gains to close up 1.1%. It has climbed 5.7% amid a five-day win streak. The ETF outperformed the broader stock market by a wide margin, as the S&P 500 index SPX, +0.12%
inched up 0.1% and the Nasdaq Composite COMP, +0.21%
edged up 0.2%.
The ETF’s most-active component was Tesla’s stock TSLA, +6.90%,
which climbed 6.9% to $279.82, the highest close since Sept. 28, 2022. It has run up 16.1% amid a five-day win streak.
The rally comes after Tesla revealed over the weekend a blowout deliveries report, in which the EV leader said it delivered a record 466,000 vehicles in the most recent quarter, well above expectations of 449,000.
The ETF’s second-most active member was Rivian Automotive Inc.’s stock RIVN, +17.41%,
which shot up 17.4% to its highest close since Feb. 17, and rocketed 45.4% amid a five-day win streak.
Nio Inc.’s U.S.-listed stock NIO, +3.51%
rallied 3.5% to $10.03, the first close above the $10 mark since March 31, after the Shanghai-based EV maker reported June deliveries that jumped 74% from May, but were down 17.4% from a year ago.
Among its China-based peers, the U.S.-listed shares of Xpeng Inc. XPEV, +4.17%
advanced 4.2% to the highest close since Sept. 26, 2022, of Li Auto Inc. LI, +3.42%
hiked up 3.4% to the highest close since July 21, 2022 and of Boyd Co. Ltd. BYDDY, +3.07%
rose 3.1%.
Elsewhere, Lucid Group Inc. shares LCID, +7.26%
charged 7.3% higher to a record sixth-straight gain and the highest close since May 31, as the EV sector’s rally helped offset an effective downgrade at Citi Research.
In an interview on YouTube channel “Financial Journey,” as disclosed on Friday, Mullen Chief Executive Officer David Michery said he doesn’t believe the stock’s price reflects the true value of the company.
He said he expects manufacturing of the Mullen One class 1 last-mile delivery cargo vans to begin in August with “sellable” vehicles available in September.
For the Mullen Three class 3 trucks, with a gross vehicle Weight Rating (GVWR) of 11,000 pounds, Michery said manufacturing will start “right around the corner” in July, with sellable vehicles in August and September.
Things move quickly in the world of artificial intelligence. It is easy to sit back and complain about developments that could be disruptive, but sometimes investors are best served by putting emotions aside and observing new developments and how they affect markets. Could AI developments and related trends make you a lot of money?
Below is a new screen showing a group of AI-oriented companies expected to increase their sales most rapidly through 2025, based on consensus estimates among analysts polled by FactSet. Then we show expected revenue growth rates for the largest AI-oriented companies in the screen.
Over the long haul, many businesses might perform more efficiently by employing AI. Maybe this technology can create an economic revolution similar to the one that moved the majority of the working population away from agricultural labor during the 19th and 20th centuries.
Back in February, we screened 96 stocks held by five exchange-traded funds focused on AI and related industries and listed the 20 that analysts thought would rise the most over the following 12 months.
Three months is a long time for AI, and the shakeout hasn’t even started.
There is no way to predict how politicians will react to perceived or real threats of AI and machine learning. And the largest U.S. tech players are doing everything they can to employ the new technology and remain dominant. But that doesn’t mean they will grow more quickly than smaller AI-focused players.
A new AI stock screen
Once again we will begin a screen with these five ETFs:
The Global X Robotics & Artificial Intelligence ETF BOTZ, +0.97%
BOTZ was established 2016 and has $1.8 billion in assets under management. The fund tracks an index of companies listed in developed markets that are expected to benefit from the increased utilization of robotics and AI. There are 44 stocks in the BOTZ portfolio, which is weighted by market capitalization and rebalanced once a year. Its largest holding is Intuitive Surgical Inc. ISRG, +0.53%,
which makes up 10% of the portfolio, followed by Nvidia Corp. NVDA, +3.30%
at 9.4%.
The iShares Robotics and Artificial Intelligence Multisector ETF IRBO, +1.64%
holds 116 stocks that are equal-weighted, as it tracks a global index of companies that derive at east 50% of revenue from robotics or AI, or have significant exposure to related industries. This ETF was launched in 2018 and has $304 million in assets.
The $246 million First Trust Nasdaq Artificial Intelligence & Robotics ETF ROBT, +1.83%
has 107 stocks in its portfolio, with a modified weighting based on how directly companies are involved in AI or robotics. It was established in 2018.
The Robo Global Artificial Intelligence ETF THNQ, +1.81%
has $26 million in assets and was established in 2020. I holds 69 stocks and isn’t concentrated. It uses a scoring system to weight its holdings by percentage of revenue derived from AI, with holdings also subject to minimum market capitalization and liquidity requirements.
The newest ETF on this list is the WisdomTree Artificial Intelligence and Innovation Fund WTAI, +2.42%,
which was established in December and has $13 million in assets and holds 73 stocks in an equal-weighted portfolio. According to FactSet, stocks are handpicked and selected companies “generate at least 50% of their revenue from AI and innovation activities, including those related to software, semiconductors, hardware technology, machine learning and innovative products.”
Altogether and removing duplicates, the five ETFs hold 270 stocks of companies in 23 countries. We first narrowed the list to 197 covered by at least nine analysts and for which consensus sales estimates are available through calendar 2025. We used calendar-year estimates because some companies have fiscal years that don’t match the calendar.
Here are the 20 screened AI-related companies expected by analysts to have the highest compound annual growth rates (CAGR) for sales from 2023 through 2025. Sales estimates are in millions of U.S. dollars. The list also shows which of the above five ETFs holds each stocks.
Click the tickers for more about each company or ETF.
Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote pages.
We have screened for expected revenue growth, rather than for earnings or cash flow, because in a newer tech-oriented business area, investors are most likely to consider the top line as companies sacrifice profits to build market share.
It is important to do your own research if you consider purchasing any individual stock, to form your own opinion about a company’s ability to remain competitive over the long term. Starting from the top of the list, BioXcel Therapeutics Inc. BTAI, -2.47%
is expected to show exponential sales growth, but that is from a low expected baseline this year.
What about the largest AI-related companies held by these ETFs?
Here are the largest 20 companies in the screen by market capitalization, ranked by expected sales CAGR from 2022 through 2025. Once again the sales estimates are in millions of U.S. dollars, but the market caps are in billions.
U.S. stock indexes are wavering between small gains and losses on Wall Street Wednesday, struggling to gain ground after a four-day losing streak amid worries about the chances of an economic downturn in coming months.
How are stock-index futures trading
S&P 500 SPX, -0.16%
dropped 14 points, or 0.3%, to 3,927
Dow Jones Industrial Average DJIA, +0.08%
shed 70 points, or 0.2%, to 33,528, after rallying over 145 points earlier in the session
Nasdaq Composite COMP, -0.50%
fell 83 points, or 0.8% to 10,931
On Tuesday, the Dow Jones Industrial Average fell 351 points, or 1.03%, to 33596, the S&P 500 declined 58 points, or 1.44%, to 3,941, and the Nasdaq Composite dropped 225 points, or 2%, to 11,015.
What’s driving markets
A four-day losing streak, during which the S&P 500 index has lost 3.4%, showed little sign of being snapped Wednesday as investors continued to assess the potential economic damage inflicted by high inflation and the Federal Reserve’s campaign to damp it by raising interest rates. U.S. stock indexes extended losses in midday trade despite regaining some ground in the morning session.
“The recent run of macro data points in the U.S. continues to underscore relatively solid economic trends. And combined with the recent easing in financial conditions, it may trigger a need for the Fed to push back in December. Put another way, the dove camp is feeling some pain,” said Stephen Innes, managing partner at SPI Asset Management.
Jim Reid, strategist at Deutsche Bank , noted that the S&P 500 had now lost ground in the last seven out of eight sessions. “In fact, the latest moves for the S&P mean it’s now unwound the entirety of the rally following Fed Chair Powell’s [supposedly dovish] speech last week, which makes sense on one level given he didn’t actually say anything particularly new.”
The S&P 500 has fallen 17.2% in 2022 as the Federal Reserve has driven borrowing costs sharply higher in an effort to tame inflation that has been running at the fastest pace in 40 years.
“Fears are growing that economies are in for a rough time ahead as feverish inflation and the bitter interest rate medicine being used to bring it down take effect,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
“Worries deepened amid warnings from U.S. banking and media sectors that navigating through the storm would not be easy, while the latest data has shown China’s trade has been sideswiped by a drop in global demand and zero-COVID policies. Despite today’s easing of restrictions it’s clear China’s COVID nightmare is not at an end,” Streeter added.
China on Wednesday announced a series of measures rolling back some of its most draconian anti-COVID-19 restrictions. People who test positive for the virus will be able to isolate at home rather than in overcrowded and unsanitary field hospitals, and schools where there have been no outbreaks must return to in-class teaching, according to the National Health Commission.
The Hang Seng index HSI, -3.22%
in Hong Kong fell 3.2%, while the CSI 300 000300, -0.25%
dropped 0.2%, suggesting investors had already discounted Beijing’s more relaxed COVID stance.
However, long time bull Tom Lee, head of research at Fundstrat, reckons equities will benefit in coming weeks as investors start to get greater clarity on when the Fed may stop tightening policy.
“We don’t think the end of the inflation war in 2022 is the Fed cutting rates. It is when Fed and markets see sufficient progress in inflation to remove the upside risks to higher rates. We think this could happen as early as the November CPI report. This will be released on 12/13,” Lee wrote in a note.
“And if November CPI is soft, we think this will support a strong year-end rally. Admittedly, a 10% move between now and [year end] seems a stretch given the S&P 500 is around 4,000 but… the broader point is we see stocks having positive skew given the cautious positioning of investors and the possibility of very favorable incoming inflation reports,” Lee added.
On the U.S. economic front, nonfarm productivity, which measures hourly output change per worker, rose at a 0.8% annualized rate last quarter, the Labor Department said on Wednesday. Unit labor costs, the price of labor per single unit of output, climbed by a smaller 2.4% annual pace in the third quarter, compared to the preliminary 3.5% increase.
What companies are in focus
Carvana Co. CVNA, -31.45%
shares slumped 33% after creditors led by Apollo Global Management Inc. and Pacific Investment Management Co. inked an agreement to team up in credit talks with the used car dealer in a move to avoid the conflicts that have arisen in other debt restructurings.
Lowe’s LOW, +3.05%
shares gained 2.1% after the company announced a new $15 billion share repurchase program and the home improvement retailer reaffirmed its full-year forecast.
Chinese electric vehicle stocks NIO Inc. NIO, -4.87%
and XPeng Inc. XPEV, -7.74%
dropped over 6.2% and 8.2%, respectively, despite news of the country easing some COVID-19 restrictions on production and travel.
The U.S.-listed shares of China-based electric vehicle maker XPeng Inc. skyrocketed Wednesday, as investors cheered changes in China’s COVID policy while shrugging off weak third-quarter results and a downbeat outlook.
The stock XPEV, +45.44%
charged up 45.0% in midday trading, enough to pace all gainers on the New York Stock Exchange. It was also headed for the biggest one-day gain since going public in August 2020, surpassing the previous record advance of 33.9% on Nov. 23, 2020.
The rally comes even after XPeng reported a wider-than-expected loss for the third-straight quarter, missed on revenue for the first time and said it expected fourth-quarter revenue to fall 40% to 44% from a year ago while the FactSet consensus called for just a 4.4 decline.
Instead, investors seemed China appeared to move toward easing its zero-COVID policy, amid growing social unrest and a slowing economy. China’s government said Tuesday that it would renew its push to vaccinate the elderly, and said it would amend COVID control measures.
XPeng’s stock rally also comes at a time when investor sentiment had soured. Earlier this week, Jefferies analyst Johnson Wan downgraded the EV maker, citing recent “missteps” by the company at a time that the “honeymoon stage” for EVs in China was coming to an end.
In addition, short interest, or bearish bets on XPeng’s stock, was 5.7% of the public float, or freely tradable shares, based on the latest available exchange data. That compares with short interest as a percent of float for China-based rivals Nio Inc. NIO, +20.14%
at 4.1% and Li Auto Inc. LI, +18.35%
at 4.7%.
For Tesla Inc. TSLA, +2.12%,
which generated $5.13 billion in revenue from China in its latest quarter, or about 24% of total revenue, short interest as a percent of float was 2.9%.
XPeng’s stock has soared 60.7% in November but has still tumbled 41.7% over the past three months. In comparison, the Invesco Golden Dragon China exchange-traded fund PGJ, +8.98%
has shed 11.7% the past three months while the S&P 500 index SPX, +0.62%
has slipped 1.1%.
