S&P 500 futures gain after Tesla's China gamble

Stock markets on Wall Street rose slightly on Monday, ahead of a big week of interest rate decisions from the Federal Reserve, the monthly jobs report and gains from even more Magnificent Seven tech heavyweights.

Futures on the S&P 500 (^GSPC) and tech-heavy Nasdaq 100 (^NDX) both rose about 0.2%, while Tesla (TSLA) shares rose on positive news from China. Contracts on the Dow Jones Industrial Average (^DJI), which has fewer technical components, rose about 0.1%.

Stocks are looking for a return to Friday's sharp gains, which came as strong gains from Alphabet (GOOG, GOOGL) and Microsoft (MSFT) boosted optimism for a continued Big Tech-led rally. The quarterly reports from Apple (AAPL) and Amazon (AMZN), due this week, will put these hopes to the test again, scrutinizing the costs and prospects of AI.

Among techies, Tesla CEO Elon Musk's surprise visit to China on Sunday brought immediate benefits for the EV maker, which cleared two major barriers to the rollout of its Full Self Driving software in the country. Shares of Tesla rose nearly 10% in the premarket after it reached an FSD-linked deal with Baidu (BIDU), which could help stem a sales decline in a huge market. The Chinese internet giant's US-listed shares rose 6%.

At the same time, investors are counting down to the Federal Reserve's policy decision at the end of Wednesday's two-day meeting. There is confusion over whether the cooling in inflation has come to a halt and what any continued price pressures imply for rate cuts.

While the central bank is expected to keep interest rates steady at a 23-year high, debate rages over the timing and even likelihood of a cut in 2024. The focus is on whether Fed policymakers will back down to their previous projection of significant credit easing. cost. Traders have already scaled back their bets, and the April jobs report that rounds out the week could move the needle again.

Among major individual movers, shares of Philips (PHG) rose more than 40% on Monday after the medical device maker said it had struck a $1.1 billion deal to settle claims related to the recall of ventilators. The settlement was significantly lower than expected.

Live1 update

  • 41fcc720 f5a8 11ee bbe2 e9cb8cdc4c82

    Important point about Tesla from EvercoreISI

    The analyst note of the morning – at least for me – is EvercoreISI analyst Chris McNally's 61-page deep dive on Tesla (TSLA).

    McNally cut his price target to $145 from $155 (shares are pointing to a 7% rise pre-market after Musk's AI win in China this weekend, also lifting shares of new partner Baidu), citing a host of concerns – specifically the inability of Tesla to reach its sales before 2024.

    In the report, McNally makes a good point about Tesla not being able to expand its market due to a lack of models. He uses BMW as an example of a car company that sells multiple models to attract numerous types of consumers.

    Tesla could learn a few things from BMW.Tesla could learn a few things from BMW.

    Tesla could learn a few things from BMW. (EvercoreISI)

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