Stocks struggled to get off the ground Tuesday as volume thinned out ahead of the holiday. As a reminder, the stock and bond markets will close early tomorrow and remain closed Thursday for the Fourth of July.
Despite today's slow start, the main indexes finished in positive territory thanks to Fed Chair Powell's dovish comments and a continued rally in mega-cap stocks.
Just after Powell took the stage at a central bank forum in Sintra, Portugal, data released from the Bureau of Labor Statistics showed job openings rose slightly to 8.1 million in May from 7.9 million in April, topping economists' expectations. However, the Job Openings and Labor Turnover Survey (JOLTS) also showed April's figure was revised lower by 140,000.
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The data underscores a resilient but slightly cooling labor market, which Powell said is "kind of what we were hoping to see, and what we have been seeing." He also highlighted the disinflation trend seen in recent economic reports, saying "quite a bit of progress" has been made in bringing the rate of price growth down.
However, the head of the central bank reiterated the familiar talking point that the Fed needs to see more data to make sure inflation is "moving sustainably toward 2%" before it can begin cutting interest rates.
Powell also said he would not give a specific date for when the central bank will start lowering rates. According to CME Group's FedWatch Tool, futures traders are pricing in a 63% chance the first quarter-point cut will come in September.
Tesla soars after Q2 deliveries data
Tesla (TSLA) stock rallied 10.2% – making it the best S&P 500 stock of the day – after the electric vehicle maker said it delivered a more-than-anticipated 443,956 vehicles in Q2. Today's upside is more of the same for the red-hot Magnificent 7 stock, which is up 60% since late April.
More recently, TSLA encountered "a wave of positive momentum following its annual meeting in mid-June, at which shareholders re-approved Musk's 2018 compensation plan," says CFRA Research analyst Garrett Nelson (Buy). "At the meeting, we think Musk successfully shifted investor focus to long-term opportunities in artificial intelligence (AI), robotics, energy storage, and other business lines, diverting attention away from near-term challenges."
Nelson says the next big event for the EV maker will be its upcoming Robotaxi Day on August 8, and "is likely to be much more important than either today's report or its July 23 earnings release, in our view."
CrowdStrike has run too far, too fast, says analyst
On the negative side of the ledger was CrowdStrike (CRWD), which fell 1.8% after Piper Sandler analyst Rob Owens downgraded it to Neutral from Overweight (the equivalents of Hold and Buy, respectively).
The downgrade is a "valuation call," Owens says following a roughly 50% year-to-date gain for the cybersecurity stock. Additionally, CrowdStrike's impressive growth off the price charts suggests that "meaningful upside will likely become more difficult as the law of large numbers should begin to weigh on overall growth rates for the security leader."
As for the main indexes, the Nasdaq Composite rose 0.8% to 18,028, the S&P 500 added 0.6% to 5,509, and the Dow Jones Industrial Average gained 0.4% to 39,331.
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