New York Stock Market Mixed in Early Trading... Tesla and Electric Vehicle Rally

The three major U.S. stock indices showed mixed trends in early trading on the 3rd (local time), the first trading day of the second half of the year. This week’s trading is scheduled to be shorter than usual due to the Independence Day holiday on July 4th.

At around 10:10 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was down 33.02 points (0.10%) from the previous close, trading near 34,374. The large-cap-focused S&P 500 index was up 1.16 points (0.03%) at 4,451, while the tech-heavy Nasdaq index rose 36.24 points (0.26%) to 13,824.

Currently, within the S&P 500, discretionary consumer goods, real estate, utilities, and materials sectors are rising, while healthcare, industrials, and technology sectors are declining. Electric vehicle maker Tesla is up more than 7% after reporting second-quarter vehicle deliveries that exceeded Wall Street expectations. Other EV stocks are also rallying in unison. Rivian rose 13%, Lucid gained 6%, and Chinese XPeng jumped over 3% on news of increased vehicle deliveries compared to the previous quarter. Additionally, Apple, which surpassed a market capitalization of $3 trillion at last week’s close, showed a slight decline following reports of plans to reduce Vision Pro production.

[Image source=Reuters Yonhap News]

Investors are closely watching manufacturing indicators amid reduced trading volume ahead of Independence Day. The NYSE and Nasdaq will close early at 1 p.m. Eastern Time, and the bond market will close at 2 p.m. The financial markets will be closed the following day for the holiday.

The manufacturing data released today was weak. S&P Global’s June Manufacturing Purchasing Managers’ Index (PMI) was finalized at 46.3, marking the lowest level in six months. The Institute for Supply Management (ISM) also reported a June manufacturing PMI of 46, below market expectations of 47.3.

Currently, the market is focused on whether the three major New York stock indices, which rallied in the first half of the year, can maintain this momentum in the second half. This week will see the release of key economic indicators, including the June employment report and the minutes from the June Federal Open Market Committee (FOMC) meeting.

The FOMC minutes, to be released on the 5th, are expected to reveal internal discussions related to the Fed’s decision last month to hold the benchmark interest rate steady. They will likely explain why the year-end rate forecast on the dot plot was raised from 5.1% to 5.6% (median), as well as provide assessments of recent economic growth and inflation. Investors are expected to seek clues about the future direction of monetary policy based on this information.

Market consensus favors a resumption of rate hikes at this month’s meeting. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) futures market currently prices in nearly an 88% chance of a 25 basis point rate hike (a “baby step”) in July. However, unlike the Fed’s dot plot, which forecasts two hikes this year, the futures market still favors a scenario of one hike followed by a pause.

June employment data closely monitored by the Fed will also be released this week. Attention is particularly focused on the employment report due on the 7th. Wall Street estimates that nonfarm payrolls increased by 240,000 in June compared to the previous month, with the unemployment rate expected to be 3.6%. Prior to this, the ADP private employment report and the Job Openings and Labor Turnover Survey (JOLTs) will also be published. Speeches by Fed officials, including John Williams, President of the Federal Reserve Bank of New York, and Lori Logan, President of the Dallas Fed, are also scheduled.

Earnings reports from companies such as Coca-Cola and Levi Strauss will be released. Additionally, following the OPEC international seminar, the Biden administration’s announcement of the size of strategic petroleum reserve (SPR) purchases will draw attention for its potential impact on international oil prices.

Currently, in the New York bond market, the 10-year Treasury yield is around 3.81%, and the 2-year Treasury yield, which is sensitive to monetary policy, is near 4.88%. The dollar index, which measures the value of the U.S. dollar against six major currencies, is steady around 102.9.

International oil prices are declining. The August West Texas Intermediate (WTI) crude oil price is trading at $70.51 per barrel, down 0.18% from the previous close.

This content was produced with the assistance of AI translation services.