This Week In Markets ⚡️ 07/01 - 07/05

Good Afternoon, market movers! Welcome back to our weekly stock market update, where we break down the chaos of Wall Street with a dash of wit and a sprinkle of savvy. Whether you’re a seasoned trader or just here for the ride, we've got the scoop to keep you in the loop. Let’s get this show on the road! 🚀📈

MARKETS

• The S&P 500 surged like a firework, ending the holiday week on a high note with its 34th record close of the year. The Nasdaq also hit a new record, driven by strong performances from tech giants like Apple, Microsoft, and Meta.

• Stocks rallied across the board following the latest jobs report, which showed a slower hiring pace and a rise in unemployment to 3.7%, the highest level since November 2021. This fueled optimism that the Federal Reserve might ease monetary policy, lifting the S&P 500 and Nasdaq to new highs, and even giving the Dow a boost.

• Bond yields fell as the mixed jobs data seemed to reinforce expectations that the Federal Reserve will likely cut interest rates later this year.

• Gold reached a one-month high, reflecting investor demand for safe-haven assets amid economic uncertainties. Although oil prices dipped slightly, they managed to secure a fourth consecutive week of gains.

  Bitcoin tumbled nearly 10% as a large amount of the cryptocurrency entered the market, though it managed to recover most of its losses by the end of the day​

STOCK
Tesla short sellers get electrified

It’s been a tough week for those betting against Tesla: Short sellers who believed the stock was overvalued are now reeling from massive losses. Following Tesla's better-than-expected second-quarter deliveries report, the stock surged 17% in just two trading days, causing short sellers to lose an estimated $3.5 billion. This rally has been particularly painful, as Tesla shares have climbed 73% since their yearly low in April.

Despite this surge, Tesla’s challenges persist. The company reported delivering 443,956 vehicles in Q2, slightly above Wall Street's expectations but nearly 5% fewer than the same period last year. To maintain demand amidst an aging lineup and increased competition, Tesla has been cutting prices and offering financing perks. For instance, it reduced prices in Germany and Norway and provided zero-interest loans in China.

Moreover, the rollout of the new Cybertruck has faced quality issues, leading to multiple recalls in the U.S. These challenges have led analysts to predict a revenue decline of 2.9% for the upcoming earnings report, following a 9% drop in the first quarter.

Elon Musk remains confident, urging short sellers to reconsider their positions. He’s been promoting Tesla's future ventures, including a self-driving ride-hailing service and the Optimus humanoid robot, which he believes could elevate Tesla's market value to trillions. The company has committed $10 billion to AI research in 2024 and plans to unveil a robotaxi in August.

However, analysts warn that Tesla needs to rejuvenate its EV sales to support its ambitious R&D plans. The introduction of lower-cost models next year aims to stimulate sales. Yet, Tesla’s brand image has taken a hit, which consumers are blaming mainly due to Musk’s controversial statements and political activities, which have alienated some consumers. Despite these hurdles, Musk’s vision for Tesla’s future remains bold and ambitious.

STOCK
Winners & Losers

What’s up This Week 📈

• Tesla soared 24.87%

• Palantir rose 7.67% 

• Apple jumped 7.24% 

• Meta surged 6.94%

• Broadcom climbed 5.69%

What’s down This Week📉

• Microstrategy dropped 10.05%

• Chewy slipped 8.24%

• Carnival Cruise Line fell 8.23%

• Dick’s Sporting Goods decreased by 6.31%

• Southwest Airlines declined 5.42%

NEWS
Market Movements

• Boeing buys Spirit Aerosystems for $4.7 billion

• A poison pill will allow Southwest to defend itself against activist investor Elliott Investment Management.

• New York short-seller, Hindenburg Research, significantly reduced the market value of Adani Group by $153 billion with fraud allegations but only profited $4 million from the effort

• Jeff Bezos to offload $5bn of Amazon stock

• U.S. economy adds 206,000 jobs in June, unemployment rate ticks higher

• The release of bitcoin from the defunct Mt. Gox exchange, amounting to billions of dollars, has raised concerns about potential selling pressure and its impact on cryptocurrency markets, which have already seen Bitcoin prices drop by 10% in the past week

NEWS
Amazon to Unveil Discount Store in a Showdown with Temu and Shein

Amazon is setting its sights on the discount market with a new storefront aimed at attracting budget-conscious shoppers and fending off competition from Temu and Shein. The announcement was made at a closed-door event for Chinese sellers, where Amazon detailed its latest strategy.

This new storefront represents Amazon's most determined effort yet to counter Temu and Shein, both of which have rapidly gained traction in the U.S. thanks to their unbeatable prices.

During the exclusive conference, Amazon previewed a range of unbranded items, most priced under $20. The sneak peek included a variety of products, from gua sha facial tools to phone cases and arm weights. The plan is to ship these products directly from China to U.S. consumers, promising delivery within nine to eleven days—a significant shift from the traditional Fulfillment by Amazon model.

Amazon's pitch to Chinese sellers highlighted cost savings and the flexibility to experiment with small-batch production, much like Shein’s on-demand manufacturing model. This approach allows sellers to test new products and increase production as demand grows.

In a statement to CNBC, Amazon spokesperson Maria Boschetti said, “We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience.” However, she declined to provide further details on the timeline for the new storefront’s debut.

Amazon’s renewed focus on Chinese sellers comes as it faces growing competition in the e-commerce space. Last December, the company opened an “innovation center” in Shenzhen and reduced fees for merchants selling low-cost clothing. These efforts have paid off, with items sold by Chinese sellers growing over 20% year-over-year and the number of Chinese sellers earning more than $10 million annually increasing by 30%.

With this latest move, Amazon aims to solidify its position in the e-commerce market, offering low prices and a wide selection to attract shoppers looking for a good deal.