Federal Reserve Chair Jerome Powell’s comments on disinflationary path boost market confidence, while Tesla stock surges 10% on strong quarterly deliveries and pharma giants push back against Biden 👀
Stock Market Rally 📈
The S&P 500 and Nasdaq Composite closed at record highs on Tuesday, driven by a rally in megacap tech stocks and encouraging comments from Federal Reserve Chair Jerome Powell on the “disinflationary path” of recent economic data. The S&P 500 added more than 0.6% to close at 5,509, marking the index’s first-ever close above 5,500. The tech-filled Nasdaq Composite also notched a record close as it gained roughly 0.8% to close at 18,028. Meanwhile, the Dow Jones Industrial Average rose just more than 0.4%.
Job Openings Data 📊
New data from the Bureau of Labor Statistics released Tuesday showed there were 8.14 million jobs open at the end of May, an unexpected increase from the 7.92 million job openings in April. This suggests that the labor market remains resilient despite concerns over recent softer data. The job openings rate ticked higher to 4.9% from 4.8% the month prior. Economists surveyed by Bloomberg had expected the report to show 7.95 million openings in May.
Powell’s Comments 👀
Powell expressed optimism about the latest inflation readings, saying they “do suggest that we are getting back on a disinflationary path.” However, he emphasized that the central bank will need to see more evidence before cutting interest rates. Powell implied that any further softening in labor demand could be met with higher unemployment but added that if the unemployment rate merely moved “plus or minus a couple of tenths” from its current 4% rate, that would be a “good outcome.” Powell added that the labor market isn’t cooling too quickly, suddenly, or steeply. Instead, it’s been “kind of what we were hoping to see, and what we have been seeing,” Powell said.
Bond Market 💰
In the bond market, Treasury yields were easing ahead of a report that may show whether the job market is cooling as much as Wall Street hopes it does. The yield on the 10-year Treasury slipped to 4.41% from 4.46% late Monday. The solidly downward move for Treasury yields since April ran into resistance the last two days, though. Last week’s debate between President Joe Biden and former President Donald Trump pushed traders to make moves in anticipation of a possible Republican sweep in November. That included pushing Treasury yields higher, in part on the possibility that a Trump White House could push for policies that would further raise the U.S. government’s debt.
Commodities Market 🛢️
In commodities markets, a barrel of benchmark U.S. crude oil rose 0.4% to $83.70 after earlier touching its highest price since April. Brent crude, the international standard, gained 0.6% to $87.16 per barrel. Crude prices have been rising on expectations for strong demand during the summer, as well as the possibility of hurricanes damaging oil production in the Gulf of Mexico. Hurricane Beryl is roaring on a path that would take it near Jamaica and the Cayman Islands.
Earnings Season 🫚
Wall Street has high hopes for the upcoming earnings season, which will kick off in earnest with reports from big banks on July 12. Consensus expects earnings to grow 9% from the year prior during the second quarter, which would mark the largest year-over-year gain since the fourth quarter of 2021. Given that expectations have been trimmed less than normal entering earnings season, Wall Street strategists have noted both earnings beats and stock pops following releases could be less frequent than normal.
Tesla Stock Soars 10% as Quarterly Deliveries Smash Wall Street Expectations! 🚘
Get ready to rev up your engines, folks! Tesla’s quarterly vehicle deliveries have just blown past Wall Street estimates, sending the electric vehicle giant’s stock surging over 10%! The numbers are in, and Tesla delivered a whopping 443,956 vehicles in the second quarter, crushing analyst consensus estimates of 439,302. That’s a significant jump from the 386,810 vehicles delivered in the first quarter, and while it’s lower than last year’s 466,140, it’s still a major win for the EV maker.
So, what’s behind this impressive performance? According to Citi analysts, the EV industry may be holding up better than expected, and Tesla’s strong delivery numbers are a major contributor to that trend. “We continue to see scope for improving sentiment in Tesla shares as well as broader EV sentiment,” they wrote.
But it’s not all smooth sailing. Tesla still faces stiff competition from Chinese rivals, and the company has been working to reduce costs by cutting over 10% of its global staff. CEO Elon Musk has also warned that near-term demand and sales will still struggle as the industry navigates a transitionary period.
Despite these challenges, Tesla’s stock has rallied an impressive 55% since its 52-week low in April, and it’s clear that investors are betting big on the company’s future. With the focus now shifting to Tesla’s Q2 auto gross margins and future product launches, one thing is certain: this is a stock to watch!
So, buckle up and get ready for the ride!
Pharma Giants Fire Back at Biden and Sanders’ Call for Lower GLP-1 Prices 💸
The gloves are off! In a bold move, President Joe Biden and Sen. Bernie Sanders (D-Vt.) called out pharmaceutical companies Novo Nordisk and Eli Lilly for their “exorbitant” prices on popular diabetes and weight-loss drugs. But the companies are not taking it lying down.
In a scathing response, Novo Nordisk and Eli Lilly slammed the politicians’ claims, saying the issue of drug pricing is far more complex than they’re making it out to be. The companies argue that the US drug pricing system is the real culprit, and that comparing list prices in the US to other countries is unfair and misleading.
“Oversimplifying and mischaracterizing the complex problem of US drug pricing for political purposes is not the solution,” Novo Nordisk said in a statement. Eli Lilly echoed the sentiment, saying that the criticism from Biden and Sanders ignores patient affordability programs and the hundreds of billions of dollars in discounts and fees paid to pharmacy benefit managers (PBMs).
But what about the prices? Novo Nordisk’s Ozempic and Wegovy, as well as Eli Lilly’s Mounjaro and Zepbound, have list prices of over $1,000 per month. Sanders has repeatedly cited a Yale University study that found the drugs can be manufactured for less than $5 per month. Ouch! However, both companies point out that most Americans have access to the drugs for $25 through savings cards or insurance. And, Novo Nordisk notes that the cost of its GLP-1s has decreased by 40% since launch.
So, what’s the real issue here? Is it the pharmaceutical companies’ “greed,” as Biden and Sanders claim, or is it the complex web of discounts, fees, and pricing structures that drive up costs in the US healthcare system?
One thing’s for sure: this battle is far from over. With billions of dollars in sales at stake, Novo Nordisk and Eli Lilly are not going to back down without a fight. Stay tuned for more drama in the world of pharma!
