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Figuring out whether you qualify for an electric vehicle tax credit isn’t easy–make, model, pricing, the state where you live, your income, and the list goes on. But once you sort things out, you can save thousands–even on a .
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https://www.barrons.com/articles/stock-market-movers-e5dab615
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https://www.barrons.com/articles/tesla-delivery-numbers-are-coming-221f59d7
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Analysts at Citi on Thursday dialed down their expectations for Tesla Inc.’s third-quarter deliveries and profit, saying they based their new numbers on China sales, global registration data and an implied production pace for the EV maker.
Tesla
TSLA,
and General Motors Co.
GM,
are scheduled to report third-quarter vehicle sales next week, while Ford Motor Co.
F,
and a few others are slated to report September sales.
Earlier this week, a Deutsche Bank analyst warned that there was “meaningful downside risk” to current 2024 Tesla projections due to limited volume growth, and cut his price target on Tesla stock.
J.D. Power on Thursday estimated another double-digit gain for U.S. new-car sales in September. GM, Ford and Stellantis NV
STLA,
are facing a strike affecting some of its assembly plants and, in the case of GM and Stellantis, auto-parts distribution centers.
The Citi analysts, led by Itay Michaeli, said they trimmed their Tesla quarterly sales estimates to 450,000 vehicles, from a previous expectation of 468,500 vehicles.
See also: Tesla sued for racial discrimination, retaliation by EEOC
They lowered their forecast for adjusted per-share earnings to 75 cents in the quarter, from a prior estimate of an adjusted EPS of 81 cents for the quarter.
The Citi’s expectations compare with FactSet consensus of Tesla deliveries of 462,000 vehicles in the quarter, and consensus around an adjusted EPS of 79 cents for the quarter.
“We will revisit our model post the [third-quarter] delivery report,” the Citi analysts said. They kept the equivalent of a hold rating on the stock.
The update on the sales estimates was based on recent weekly China data “in part reflecting the Model 3 refresh transition,” as the compact sedan in some parts of the world is getting a minor update; the latest available global Tesla registration data; and their observations on production rate and “inventory discounting, with our estimates assuming some [quarter-on-quarter] de-stocking,” the analysts said.
Given Tesla’s production pace and the Model 3 changes, “we see a greater range of delivery outcomes vs. typical quarters,” they said.
Tesla shares have doubled so far this year, compared with gains of around 12% for the S&P 500 index
SPX.
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Tesla Inc. was sued Thursday by the U.S. Equal Employment Opportunity Commission, which alleges the EV maker violated federal law by “tolerating widespread and ongoing racial harassment of its Black employees” at its Fremont, Calif., plant, and by retaliating against those opposing the harassment.
Black employees at the Fremont factory, Tesla’s
TSLA,
first assembly plant and for years its only vehicle-manufacturing facility in the U.S., “have routinely endured racial abuse, pervasive stereotyping and hostility” as well as having racial slurs hurled at them, the lawsuit alleges.
“Slurs were used casually and openly in high-traffic areas and at worker hubs,” the EEOC said. Black employees “regularly” saw graffiti with slurs, swastikas, threats and nooses throughout the facility, including on desks, in bathroom stalls and elevators, according to the suit.
Tesla, which disbanded its media relations team during the pandemic, did not immediately return a request for comment. In August, SpaceX, another one of Tesla’s Chief Executive Elon Musk’s companies, was sued by the Justice Department over its hiring practices.
Employees who spoke up against the racial hostility suffered retaliations that included being fired or transferred, the EEOC said.
The lawsuit was filed in the U.S. District Court for the Northern District of California after attempts at reaching a settlement before the litigation. It seeks compensatory and punitive damages as well as back pay for the affected workers. It also seeks changes to Tesla’s employment practices to prevent discrimination in the future, the EEOC said.
A Black Tesla employee was awarded $137 million in 2021 by a jury that agreed he was subjected to racial harassment at the Fremont factory, but in April 2022 a judge reduced the award to $15 million.
Shares of Tesla have doubled so far this year, compared with an advance of around 12% for the S&P 500 index
SPX.
The first Model S rolled out of the Fremont factory in 2012, and the plant now makes Model S, Model 3, Model X and Model Y vehicles, with capacity to make more than a million vehicles a year as well as energy products and battery cells.
Tesla opened up its second U.S. vehicle-making factory in the Austin, Texas, area in the spring of 2022.
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https://www.barrons.com/articles/tesla-stock-china-sales-7dd26568
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Arm Stock Is Rising Again. The Shares Are More Popular Than Tesla or Apple.
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Jeff Kowalsky/Bloomberg
The labor contract between the United Auto Workers and the Detroit-Three automakers expired at midnight on Thursday. A deal isn’t done and the union will …
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Investors in index funds have been well rewarded by a high concentration in the largest technology companies over the past decade. But there are also continuing warnings about the risk of such heavy concentrations, even in index funds that track the S&P 500. Solutions are offered to limit this risk, but if you expect Big Tech to continue to drive the broad market returns over the coming years, why not make an even more focused bet?
Comparisons of three index-fund approaches highlight how successful concentration in the “Magnificent Seven” has been.
The Magnificent Seven are Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
Nvidia Corp.
NVDA,
Amazon.com Inc.
AMZN,
Alphabet Inc.
GOOGL,
GOOG,
Tesla Inc.
TSLA,
and Meta Platforms Inc.
META,
We have listed them in the order of their concentration within the Invesco S&P 500 ETF Trust
SPY,
which tracks the S&P 500
SPX.
The U.S. benchmark index is weighted by market capitalization, as is the Nasdaq Composite Index
COMP
and the Russell indexes.
SPY is 27.6% concentrated in the Magnificent Seven. One way to play the same group of 500 stocks but eliminate concentration risk is to take an equal-weighted approach to the index, which has worked well for certain long periods. But here, we’re focusing on how well the concentrated strategy has worked.
Let’s take a look at the group’s concentration in three popular index approaches, then look at long-term performance and consider what happened in 2022 as rising interest rates helped crush the tech sector.
Here are the portfolio weightings for the Magnificent Seven in SPY, along with those of the Invesco QQQ Trust
QQQ,
which tracks the Nasdaq-100 Index
NDX
and the Invesco S&P 500 Top 50 ETF
XLG
:
| Company | Ticker | % of SPY | % of QQQ | % of XLG |
| Apple Inc. |
AAPL, |
7.05% | 10.85% | 12.46% |
| Microsoft Cor. |
MSFT, |
6.65% | 9.53% | 11.76% |
| Amazon.com Inc. |
AMZN, |
3.30% | 5.50% | 5.84% |
| Nvidia Corp. |
NVDA, |
3.02% | 4.44% | 5.33% |
| Alphabet Inc. Class A |
GOOGL, |
2.17% | 3.12% | 3.83% |
| Alphabet Inc. Class C |
GOOG, |
1.88% | 3.11% | 3.32% |
| Tesla Inc. |
TSLA, |
1.79% | 3.10% | 3.17% |
| Meta Platforms Inc. Class A |
META, |
1.77% | 3.60% | 3.12% |
| Totals | 27.63% | 43.25% | 48.83% | |
| Sources: Invesco Ltd., State Street Corp. | ||||
The same group of seven companies (eight stocks with two common share classes for Alphabet) is at the top of each exchange-traded fund’s portfolio, although the top seven for QQQ aren’t in the same order as those for SPY and XLG. QQQ’s weighting was changed recently as the underlying Nasdaq-100 underwent a “special rebalancing” last month.
Here’s a five-year chart comparing the performance of the three approaches. All returns in this article include reinvested dividends.
QQQ has been the clear winner for five years, but it is also worth noting how well XLG has performed when compared with SPY. This “top 50” approach to the S&P 500 incorporates many stocks that aren’t listed on the Nasdaq and therefore cannot be included in QQQ, which itself is made up of the largest 100 nonfinancial companies in the full Nasdaq Composite Index
COMP,
Examples of stocks held by XLG that aren’t held by QQQ include such non-tech stalwarts as Berkshire Hathaway Inc.
BRK.B,
Johnson & Johnson
JNJ,
Procter & Gamble Co.
PG,
Home Depot Inc.
HD,
and Nike Inc.
NKE,
Now let’s go deeper into long-term performance. First, here are the total returns for various time periods:
| ETF | 3 Years | 5 Years | 10 Years | 15 Years | 20 Years |
|
SPDR S&P 500 ETF Trust SPY |
40% | 69% | 223% | 370% | 531% |
|
Invesco QQQ Trust QQQ |
41% | 113% | 430% | 882% | 1,158% |
|
Invesco S&P 500 Top 50 ETF XLG |
41% | 85% | 262% | 404% | N/A |
| Source: FactSet | |||||
Click on the tickers for more about each ETF, company or index.
There is no 20-year return for XLG because this ETF was established in 2005.
For five years and longer, QQQ has been the runaway leader, but for 5, 10 and 15 years, XLG has also beaten SPY handily, with broader industry exposure.
Something else to consider is that during 2022, when SPY was down 18.2%, XLG fell 24.3% and QQQ dropped 32.6%.
For disciplined long-term investors, the tech pain of 2022 may not seem to have been a small price to pay for outperformance. And it may have been easier to take the pounding when holding SPY or even XLG that year.
Here’s a look at the average annual returns for the three ETFs:
| ETF | 3 years | 5 years | 10 years | 15 years | 20 years |
|
SPDR S&P 500 ETF Trust SPY |
11.8% | 11.0% | 12.4% | 10.9% | 9.6% |
|
Invesco QQQ Trust QQQ |
12.0% | 16.3% | 18.2% | 16.4% | 13.5% |
|
Invesco S&P 500 Top 50 ETF XLG |
12.2% | 13.1% | 13.7% | 11.4% | N/A |
| Source: FactSet | |||||
So the question remains — do you believe that the largest technology companies will continue to lead the stock market for the next decade at least? If so, a more concentrated index approach may be for you, provided you can withstand the urge to sell into a declining market, such as the one we experienced last year.
Here is something else to keep in mind. In a note to clients on Monday, Doug Peta, the chief U.S. investment strategist at BCA, made a fascinating point: “The only novel development is that all the heaviest hitters now hail from Tech and Tech-adjacent sectors and are therefore more prone to move together than they were at the end of 2004, when the seven largest stocks came from six different sectors. “
Nothing lasts forever. Peta continued by suggesting that investors who are tired of big tech taking all the glory “need only wait.”
“[I]f history is any guide, their time at the top of the capitalization scale will be short,” he wrote.
Don’t miss: These four Dow stocks take top prizes for dividend growth
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The fortunes of
Apple
the world’s largest public company, have a tendency to lead around much of the rest of the stock market. After the tech giant’s woes contributed to widespread declines last week, investors can now breath…
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“Super apps” have never truly existed in the United States, and it is apparent at this point that they never will.
That isn’t stopping some executives and investment analysts from still dreaming of becoming one-stop shops for their users’ needs, something only a small handful of apps in Asia have managed to do. The most prominent is Elon Musk, the Tesla Inc. TSLAchief executive who purchased Twitter last year and has proclaimed that he will turn it into an “everything app” called X that resembles super apps in China.
“I…
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Shares of electric-vehicle startup VinFast Auto Ltd. have surged since the company went public through a special-purpose acquisition company deal last week, taking its market capitalization to levels well beyond established automakers such as Ford Motor Co. and General Motors Co.
Shares of low-float company VinFast
VFS,
rose 16.1% Friday, after ending Thursday’s session up 32.3%, sending the company’s market cap to $231.3 billion. In comparison, Ford’s
F,
market cap is $47 billion and GM’s
GM,
is $45.2 billion, according to FactSet data. Rival EV maker Rivian Automotive Inc.
RIVN,
has a market cap of $18.6 billion. However, all of these are dwarfed by Tesla Inc.’s
TSLA,
$730.2 billion market cap.
In roughly a week, the VinFast stream on Stocktwits, a social platform for investors and traders, has racked up about 3,000 watchers, and message volume is “pretty consistent” throughout the day, Tommy Tranfo, Stocktwits’ head of community, and Tom Bruni, a senior writer for the platform, told MarketWatch Thursday.
Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch
“What everyone is discussing is whether or not the current hype in the stock is warranted given where the business is,” Tranfo and Bruni said in a statement emailed to MarketWatch Thursday, noting the company’s soaring market cap. “That’s despite the underlying business doing less than $1 billion in revenue, having negative cash flow from operations of $1.5 to $2 billion.”
In the short term, the stock is trading on momentum and hype, according to Tranfo and Bruni. “But eventually, its business results have to justify the valuation. And as we’ve seen with other startups in the space, it’s easy to say they’re going to accomplish XYZ, but harder to actually execute and produce results,” they said.
“From the community side: [We] think what we’re paying attention to the most right now is if this hype sticks,” they added.
The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.
About 99% of VinFast’s shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.
Stocktwits’ Tranfo and Bruni noted that EVs have a good track record of growing strong retail community support. “So there is reason to believe that this momentum could continue, but it may be too early to tell for sure,” they added. “Retail loves the electric-vehicle industry, so the interest is likely to continue regardless of how well the company (and stock) actually perform.”
Related: Tesla’s stock jumps 7% after Baird highlights Cybertruck, other ‘catalysts’ for the year
VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The EV startup says the plant will eventually have the capacity to make 150,000 EVs a year.
Claudia Assis contributed.
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The so-called Magnificent Seven grouping of technology stocks lost some of its luster this week after four of the seven moved into correction territory, meaning their stocks have fallen at least 10% from their recent peaks.
The corporate-bond market, in contrast, seems to like all seven names.
The group is made up of Facebook parent Meta Platforms Inc.
META,
Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
Nvidia Corp.
NVDA,
Amazon. com Inc.
AMZN,
Google parent Alphabet Inc.
GOOGL,
GOOG,
and Tesla Inc.
TSLA,
One caveat: Tesla has no outstanding bonds. In the past, the electric-car maker issued convertible bonds, but they have all been converted into equity.
The group is credited with helping drive the stock market’s gains in the first half of the year, driven by excitement about artificial intelligence. But the rally has stalled in recent weeks as investors have fretted over the potential for U.S. interest-rate increases, surging Treasury yields and China worries, with property developer Evergrande filing for U.S. bankruptcy protection late Thursday.
On Thursday, Meta followed Apple, Microsoft and Nvidia into correction territory, as MarketWatch’s Emily Bary reported. Tesla, meanwhile, is in a bear market, meaning it’s down more than 20% from its recent peak.
Read: Have AI stocks like Nvidia reached bubble territory? Here’s what history can tell us.
The following series of charts from data-solutions provider BondCliQ Media Services show how many bonds each company has issued by maturity and how they have traded as the stocks have pulled back.
The first chart shows that Microsoft has by far the most bonds, mostly in the 30-year bucket. The software and cloud giant has more than $50 billion in long-term debt, according to its 2023 10-K filing with the Securities and Exchange Commission.
Source: BondCliQ Media Services
This chart shows trading volumes over the last 10 days, divided by trade type. The green shows customer buying, while the red is customer selling. The blue shows dealer-to-dealer flows. Microsoft, for example, has seen almost $1.3 billion in customer buying from dealers in the last 10 days and $960 million in customer sales to dealers.
Source: BondCliQ Media Services
This chart shows that every name in the group has enjoyed better net buying in the last 10 days, with Microsoft leading the way.
Source: BondCliQ Media Services
This chart shows spread performance over the last 50 days for an intermediate-term bond from each of the seven issuers. Most have tightened or remained steady over the period.
Source: BondCliQ Media Services
Read also: Red flags waving for tech stocks as AI bounce fades, China fears escalate
Apple’s stock entered correction Wednesday upon falling more than 10% from its July 31 peak of $196.45. The company sells mainly discretionary products, and right now “consumers are still being pinched” and thinking more carefully about where they spend their money, according to Matt Stucky, senior portfolio manager for equities at Northwestern Mutual Wealth Management.
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Tesla Inc.’s stock
TSLA,
dropped another 3% on Friday, extending its losses to a sixth straight session, its worst streak since a seven-session losing run in December. The stock is also poised to close at its lowest since June 2, when it closed at $213.97. It held on to its outperformance over the broader market, however, up 73% in the year to date compared with an advance of 14% for the S&P 500 index
SPX,
Tesla earlier this week announced cheaper versions of its Model S and Model X luxury EVs.
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U.S. stocks closed higher on Monday, with the Dow flipping positive near the closing bell, as technology stocks bounced back. The Dow Jones Industrial Average DJIA rose about 26 points, or 0.1%, ending near 35,308, according to preliminary FactSet data. The S&P 500 index SPX scored a 0.6% gain and the Nasdaq Composite Index COMP closed up 1.1%, booking its best daily percentage climb since July 28, according to FactSet data. The S&P 500’s information technology sector outperformed with a 1.9% gain, while the communication services segment rose 1%. The rally saw shares of Meta Platforms META, Apple Inc. AAPL, Alphabet…
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The stupidest story of the summer may be over. Finally, mercifully.
Mark Zuckerberg, billionaire and chief executive of Meta Platforms Inc.
META,
on Sunday appeared to pull the grown-up card — or at least the less-immature card — to scuttle a cage fight with Elon Musk, the even richer billionaire, Tesla Inc.
TSLA,
CEO and X owner.
From the start, it was a story that appeared to live mostly in Musk’s imagination. Yet it still sparked a media frenzy, as the prospect of two emotionally stunted billionaires publicly pummeling each other was not without some appeal.
But the proposed MMA-style fight apparently met its demise the same way it was born — through a lot of online bluster.
Weeks after proposing the fight, then resorting to multiple delaying tactics while noting how out of shape and unprepared he was, Musk apparently reached out to Zuckerberg over the weekend asking for a “practice bout” first.
Author and journalist Walter Isaacson — who is currently writing a biography of Musk — tweeted a text exchange Sunday that he said Musk had sent him.
“Wanna do a practice bout at your house next week?” a text apparently from Musk reads. The reply, purportedly from Zuckerberg: “If you still want to do a real MMA fight, then you should train on your own and let me know when you’re ready to compete. I don’t want to keep hyping something that will never happen, so you should either decide you’re going to do this and do it soon, or we should move on.”
In real news: Tesla cuts prices for some Model Y versions in China, as price war ramps back up
Zuckerberg later posted a more public burn on Meta’s Threads — the Twitter/X rival that sparked this whole thing to begin with — saying: “I think we can all agree that Elon isn’t serious and it’s time to move on…If Elon ever gets serious about a real date and official event, he knows how to reach me. Otherwise, time to move on. I’m going to focus on competing with people who take the sport seriously.”
It was unclear what the two billionaires now plan to do with their spare time, if not fight each other.
In completely unrelated news, fellow mega-billionaire and Amazon.com Inc.
AMZN,
founder Jeff Bezos and his fiancée announced a $100 million donation Friday to Maui wildfire relief efforts.
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https://www.barrons.com/articles/li-auto-earnings-stock-price-7ca16378
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A wider swath of stocks have joined the S&P 500
SPX,
upswing after the so-called Magnificent Seven — Apple
AAPL,
Amazon
AMZN,
Alphabet
GOOG,
Microsoft
MSFT,
Meta
META,
Nvidia
NVDA,
and Tesla
TSLA,
— single-handedly propelled the large-cap index into a bull market in early June, with the gauge now up more than 28% from its low notched last October and rising to new highs since April 2022, according to Dow Jones Market Data.
Hopes that the U.S. economy could pull off a soft landing and avoid a recession despite the Federal Reserve’s aggressive interest-rate hikes, as well as receding inflation pressures and expectations for the end of the Fed’s monetary tightening campaign, have underpinned a notable expansion in market breadth over the past two months, according Adam Turnquist, chief technical strategist at LPL Financial.
The S&P 500 Equal Weighted Index
SP500EW,
which lagged behind the market-cap-weighted S&P 500 index for most of the year, has now kicked back into gear and staged an impressive comeback in July. The equal-weighted index and the S&P 500 each advanced 3.1% this month, according to FactSet data.
The equal weighting eliminates the distortion of the megacap components and significantly changes several sector weightings in the S&P 500, including technology, which drops from around 29% on the SPX to only 13% on the equal-weighted index, said Turnquist in a Friday note. Meanwhile, the industrials sector has the biggest increase in weight, jumping from 9% on the SPX to 16% on the equal-weighted index.
Another way to quantify and compare market breadth is to look at the percentage of stocks on an index trading above their longer-term 200-day moving average (dma), Turnquist said. In general, if a stock is trading above its 200 dma, it is considered to be in an uptrend, and if the price is below the 200 dma, it is considered in a downtrend. Furthermore, a higher percentage of stocks above their 200 dma implies buying pressure is more widespread — suggesting the market’s advance is likely sustainable.
The chart below shows that 73% of stocks within the S&P 500 are trading above their 200 dma as of July 27, which compares to only 48% at the end of 2022. Moreover, the composition of breadth leadership has turned increasingly bullish. The highest sector readings include technology, industrials, energy, and consumer discretionary.
“So not only is breadth on the index robust, but cyclical stocks are also leading,” said Turnquist.
Wall Street often views broadening participation in the stock-market rally as a measure of health and a constructive sign of the sustainability of the bull market.
Jimmy Lee, founder and chief executive officer of The Wealth Consulting Group said he is seeing “a lot of money” flowing into areas that are not the Magnificent Seven such as stocks in the industrials, financials, materials, energy and even real-estate sectors.
The S&P 500’s industrials sector
SP500.20,
climbed 2.9% in July, while the financials sector
SP500.40,
advanced over 4.7% this month. The S&P 500’s energy sector
SP500.10,
which had been the biggest laggard when the rest of the markets exited the bear market in June, jumped 7.3% month to date after the U.S. oil benchmark
CL.1,
CL00,
closed above $80 a barrel for the first time since April.
Meanwhile, the tech-heavy S&P 500’s communication-services sector
SP500.50,
rose 6.7% in July, while the consumer-discretionary sector
SP500.25,
gained 2.4% and the information-technology sector
SP500.45,
was up 2.6%, according to FactSet data.
Stephen Hoedt, managing director of equity and fixed income research at Key Private Bank, told MarketWatch in an interview that he doesn’t see “any reason to get bearish here with the fundamentals that are underlying,” which gives investors reason to rotate toward the more cyclical areas such as energy, financials and industrials, while broadening the market away from just being concentrated in the megacap technology names.
“The growth has been a surprise this year for everyone, so that’s what the market got wrong coming into this year. When I look at growth, nominal GDP growth translates directly into earnings and we’ve seen earnings continue to surprise on the upside,” Hoedt said.
Hoedt pointed to the direction of the 12-month forward earnings estimate for the S&P 500 as an important indicator. “As long as the direction of the 12-month forward earnings number for the S&P 500 is going up, it’s really, really difficult to be bearish on the stock market,” he said. “It seems to me that we may start to see another inflection higher in forward earnings revisions that take into account this stronger growth environment that we’re in.”
However, the broadening of the stock-market rally and the bullish sentiment were also driving some on Wall Street to believe stocks are overbought and due for a correction.
Lee said there’s still too much pessimism out there and too much concern that some investors haven’t chased the market yet. “In the second half of this year, when the Fed does stop raising rates and if the economy stays out of recession, you can see major money — trillions of dollars moving from the money market into equities and other risk assets,” he told MarketWatch in a phone interview on Friday.
“When that happens, it’s probably going to push valuations even further. So I would imagine when that happens is when you can expect more of a correction to occur, but I think that we still have more room to go before that happens.”
U.S. stocks ended higher on Monday, finishing up July on a positive note. Three major stock indexes rallied this month, with the S&P 500 up 3.1% and booking its fifth monthly gain. The tech-heavy Nasdaq Composite
COMP,
gained 4.1% month to date, while the Dow Jones Industrial Average
DJIA,
advanced 3.4%, according to Dow Jones Market Data.
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https://www.barrons.com/articles/stock-market-movers-2b3602a5
