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- Babbel | July 3rd, 2024
Babbel | July 3rd, 2024
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| Market | Day | Month | Year |
|---|---|---|---|
| Dow | ▲0.41% | ▲1.19% | ▲13.97% |
| S&P | ▲0.62% | ▲3.36% | ▲23.02% |
| Nasdaq | ▲0.84% | ▲6.01% | ▲29.57% |
| Bitcoin | ▲0.26% | ▼7.24% | ▲101.64% |
| 10-Year | ▲0.05% | ▲0.02% | ▼3.79% |
GOOD MORNING
Here's everything you need to know today: Federal Reserve Chair Jerome Powell expressed optimism about improving inflation but emphasized needing more evidence before cutting interest rates. Despite positive inflation signs, the Fed remains cautious, with upcoming inflation reports crucial in shaping monetary policy decisions.
Tesla's stock has almost doubled since April, following a strong Q2 deliveries report that exceeded market expectations despite temporary setbacks. Investors are now eagerly awaiting Tesla's second-quarter financial results and a significant marketing event in August.
Trump Media raised over $105 million through the cash exercise of warrants, bolstering its financial position with more than $350 million in cash and no debt. However, the potential for stock dilution and upcoming legal challenges for Donald Trump introduces volatility to DJT stock.
Let’s dive into more detail below.
ECONOMICS
Fed Chair Powell Stays Cautious on Rates Despite Positive Inflation Signs
Upcoming inflation reports, including CPI and PCE, will be crucial in shaping the Fed’s monetary policy decisions
BREAKING NEWS
On Tuesday, Federal Reserve Chair Jerome Powell expressed much needed optimism about improving inflation but emphasized needing more evidence before cutting interest rates. The S&P 500 remained steady, while the Nasdaq Composite saw a modest 0.2% increase. At a European Central Bank conference in Portugal, Powell noted that the April and May inflation readings indicate a return to a disinflationary path aimed at a hopeful soft landing.
WHAT HAPPENED
Federal Reserve Chair Jerome Powell’s remarks come shortly after the release of the Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index. This index increased by 2.6% in May, aligning with expectations and declining from 2.8% in April. This represents the slowest annual gain in over three years. Month-over-month, the core PCE rose by 0.1%, matching forecasts and down from April’s 0.2%. These figures support the possibility of rate cuts later in the year, easing prior concerns that higher-than-expected inflation might disrupt plans for a more relaxed monetary policy in 2024.
Despite these encouraging signals, Powell indicated that the central bank is unlikely to cut rates at its upcoming late July meeting, emphasizing the need for more time and evidence to ensure inflation is moving steadily towards the 2% target. He highlighted the Fed’s progress but noted the importance of confirming that the observed levels accurately reflect underlying inflation trends. At its last policy meeting, the Fed adjusted its inflation outlook to 2.8% from 2.6% and reduced its forecast for rate cuts this year from three to one.
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ELECTRIC VEHICLES
Tesla Stock Nearly Doubles Since April as Q2 Deliveries Beat Expectations
Tesla’s deliveries in Q2 2024 surpassed most analysts’ expectations, despite falling short of last year’s 466,140 deliveries
BREAKING NEWS
Tesla stock has almost doubled since April, surging nearly 10% to $227 following the release of its impressive Q2 deliveries report. Once again, you can’t keep the controversial spaceman Musk down. The electric vehicle giant exceeded market expectations, with 443,956 vehicles delivered and 410,831 vehicles produced in Q2 2024. Investors eagerly anticipate Tesla’s second-quarter financial results, which will be posted after the market closes on Tuesday, July 23, 2024.
WHAT HAPPENED
Despite Tesla delivering an impressive number of vehicles in Q2 2024, surpassing most analysts’ expectations, they fell short of the 466,140 deliveries from last year. The electric vehicle maker’s deliveries, a close approximation of sales, were notably strong despite temporary factory shutdowns in Germany due to alleged arson and shipping delays from Red Sea conflicts. Tesla’s current lineup, including the famous Model Y crossover, Model 3 sedans, and the upcoming Cybertruck, faced stiff competition, particularly from Chinese EV manufacturers.
It’s worth noting that the company reported a first-quarter sales drop of 8.5%, attributed to lower average selling prices and increased competition, exacerbated by CEO Elon Musk’s controversial public behavior. Tesla has offered various incentives to combat sluggish sales, including zero-interest loans in China to boost Model 3 and Model Y sales by July 31. Despite these efforts, Wells Fargo analyst Colin Langan advised selling Tesla shares, citing concerns over declining delivery growth and diminished price-cut returns.
Investors have three options: sell, hold, or await Tesla’s Q2 earnings report and an upcoming marketing event in August. At this event, the company will unveil its design for a new robotaxi, potentially steering the company toward future innovations and growth.
TRUMP MEDIA
DJT Raises $105 Million in Cash Warrant Exercise Amid Fears of Stock Dilution
As Trump’s lock-up period ends in September, potential share sell-offs could introduce more volatility to DJT stock
BREAKING NEWS
Trump Media, the maker of Truth Social and majority-owned by former President Donald Trump, announced it had raised over $105 million through the cash exercise of warrants.
A cash exercise of warrants refers to the process where warrant holders pay the exercise price in cash to convert their warrants into company stock shares.
The company, trading on the Nasdaq under the DJT, now boasts more than $350 million in cash with no debt on its balance sheet. DJT, at the time of writing, has been down 32.11% in the past month, trading at $31.73 at Tuesday’s close.
WHAT HAPPENED
The exercise of these warrants, which, if fully utilized, will net the company around $247 million, could potentially dilute the stock price by increasing the number of shares in circulation.
Additionally, Trump Media announced that about $41 million in restricted cash had recently become available, boosting its cash reserves. This dilution could negatively impact the stock price, making the investment less valuable for long-term holders and Trump supporters.
Besides that, this financial boost follows its merger with Digital World Acquisition in late March, which allowed Trump Media to go public without a traditional IPO. Despite that, DJT has been down only, which is characteristic of a meme stock whose “hodlers” are left holding the bag. Following former President Trump’s conviction on 34 counts of falsifying business records, the stock endured a prolonged sell-off but has since seen partial recovery.
In a positive development, the company announced its inclusion in the Russell 1000 and Russell 3000 indexes, which could have long-term implications for its market presence and investor interest.
YESTERDAY | Here’s what you missed |
1. Tesla Stock Surges on Strong Q2 Deliveries
Tesla's stock surged 10% after the company reported higher-than-expected vehicle deliveries for the second quarter, with 443,956 vehicles delivered versus an analyst consensus of 439,302.
2. BYD Closes Gap with Tesla in EV Sales
China's BYD reported a 21% increase in Q2 electric vehicle sales, significantly narrowing the gap with Tesla. This surge follows Tesla's relinquishing of the top EV vendor title earlier this year.
3. Redbox Owner Chicken Soup for the Soul Files for Chapter 11
Chicken Soup for the Soul, which owns Redbox, filed for Chapter 11 bankruptcy protection, citing $970 million in debts against $414 million in assets. The company's shares have plummeted over 90% in the past year.
4. Six Flags Merges with Cedar Fair
Six Flags Entertainment Corporation has merged with Cedar Fair Entertainment Company, becoming the largest amusement park operator in North America. The estimated value of the merged entity is $8 billion.
5. FTC Moves to Block Tempur Sealy’s Acquisition of Mattress Firm
The Federal Trade Commission has filed a lawsuit to block Tempur Sealy's proposed $4 billion acquisition of Mattress Firm, citing competitive concerns.
6. Nvidia Faces Antitrust Charges from French Regulators
Nvidia could face antitrust charges from French regulators following a raid by the French competition agency. This scrutiny comes amidst Nvidia's rapid rise in the chipmaking industry.
7. GM Reports Best U.S. Quarterly Sales Since 2020
General Motors reported its best U.S. quarterly sales since 2020, with electric vehicle deliveries up 40% year-over-year to 21,930 units, though EVs still only represent 3.2% of GM's total Q2 sales.
8. US FDA Approves New Alzheimer’s Drug from Eli Lilly
The FDA has approved Eli Lilly's Alzheimer's drug, donanemab, for patients with early-stage symptoms, marking the second treatment approved in the U.S. that can slow the progression of the disease.
9. US Labor Market Shows Signs of Slowing
The US labor market is showing signs of slowing, with job openings unexpectedly growing in May and layoffs rising, indicating potential challenges ahead for American workers.
10. Biden Administration Supports 12 New Tech Hubs
The Biden administration announced $504 million in funding to support 12 new tech hubs across the US, aiming to boost technological innovation in regions historically receiving less government investment.
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