Dow Jones futures were little changed early Monday, along with S&P 500 and Nasdaq futures, as crude oil prices rose following a surprise production cut in Saudi Arabia. Apple (AAPL) has a big product reveal today, featuring You’re here (TSLA) and Palo Alto Networks (PANW) also stores in short.
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With the debt ceiling now raised, the Treasury is expected to issue a massive amount of short-term Treasuries starting Monday.
Apple will show off its mixed reality headset today, with one analyst calling the annual WWDC event a “muscle flexing moment” for tech giant Dow. AAPL stock rose slightly in premarket trading.
Among other megacap stocks, Microsoft (MSFT), Metaplatforms (META), parent company of Google Alphabet (Google T Nvidia (NVDA) slightly lower. TSLA stock edged higher amid strong selling in China, after breaking into a buy zone on Friday.
Meanwhile, PANW stock surged on news of its addition to the S&P 500, among many impending changes to the S&P indexes.
Big banks may have to raise their capital levels by up to 20%, the Wall Street Journal reported on Monday, one of several steps regulators could take to strengthen the banking system. Big bank stocks were modestly active pre-market.
Immunogen (IMGN) jumped more than 10% in premarket trading after the biotech announced positive results for its ovarian cancer drug in a late-stage trial.
Tesla stock joined the IBD rankings on Friday, joining META stock and Palo Alto Networks. Microsoft stock is on IBD Long-Term Leaders. PANW stock is on the IBD Big Cap 20.
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Dow Jones Futures Today
Dow Jones futures were up less than 0.1% from fair value and S&P 500 futures were about flat. Both are supported by the rise of oil and energy issuers, as well as AAPL stocks. Nasdaq 100 futures fell 0.1%.
At 10 a.m. ET, the ISM will release its non-manufacturing index for May. The services index is expected to edge up 0.1 points to 52. Readings above 50 signal growth.
Remember that the pre-market action of futures on Dow and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Oil rises as Saudi production cuts
U.S. crude oil prices again tested the high of their recent trading range, rising more than 2% to over $73 a barrel after Saudi Arabia announced on Sunday it would unilaterally cut production one million barrels per day in July. OPEC+ also agreed on Sunday to extend current production levels through 2024.
Weaker-than-expected Chinese demand and excess production from Russia combined with strong pressure in the markets from short sellers, pushing crude oil prices to 52-week lows. OPEC officials had warned short sellers of action ahead of Sunday’s meeting.
Crude oil futures fell 1.3% to $71.74 a barrel last week as shorts piled up ahead of the meeting, but prices rebounded 2.3% on Friday.
Treasury issue
With President Biden signing the debt ceiling agreement, the Treasury Department will now rush to issue new short-term debt. The Treasury could auction some $170 billion worth of Treasuries on Monday. This could disrupt Treasuries rates, even though markets were well aware that selling was coming. Further pent-up Treasury selling will soon follow. The new Treasury issue will absorb substantial market liquidity, having offset much of the Fed’s quantitative tightening in recent months. This could affect stocks.
The 10-year Treasury yield rose to 3.76% after falling 13 basis points to 3.69% last week. Treasury bill rates also climbed.
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Stock market rally
Last week’s stock market rally showed strong and broad gains, especially on Friday.
The Dow Jones Industrial Average jumped 2% in stock trading last week, resuming its 50-day line on Friday after testing its 200-day line intraday on Thursday. The S&P 500 index rose 1.8%, decisively erasing its 2023 range. The Nasdaq composite jumped 2%, hitting a 13-month high. The small-cap Russell 2000 jumped 3.3%, crossing back above its 200-day line.
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Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) jumped 2.1%. The MSFT share is a major holding of IGV. PANW is also one of the top 10 stocks for IGV. ETF VanEck Vectors Semiconductor (SMH) fell 0.8%. The NVDA stock is a huge SMH component.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) jumped 6.45% last week and ARK Genomics ETF (ARKG) jumped 4.9%. Tesla stock is the top position among Ark Invest’s ETFs.
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Apple Mixed Reality Headset
Apple will debut its long-awaited mixed reality headset in a keynote presentation at 10:00 a.m. PT at its annual Global Developers Conference. Possibly called Reality Pro, the headphones will be the tech titan’s first new hardware product line since the Apple Watch in 2015. The price, which is reportedly around $3,000, could deter buyers and limit its appeal. for the mass market. Meta Platforms recently unveiled its latest Meta Quest headset. Other rivals include the Microsoft HoloLens as well as offerings from HTC and sony (SONY).
Apple will also detail the latest operating systems for iPhone, iPad, Mac, Apple TV and Apple Watch. CEO Tim Cook could also discuss Apple’s AI efforts.
“We expect WWDC to be another ‘muscle flexing moment'” for Apple, Wedbush analyst Dan Ives wrote in a Sunday note.
Meanwhile, Evercore analysts raised their AAPL price target to 210 from 190.
Apple stock rose about 1% in premarket trading on Monday. Last week, AAPL stock rose 3.15% to 180.95, just below the January 2022 peak of 182.94. The company is also closing in on a market capitalization of $3 trillion, closing Friday at $2.85 trillion.
Other Megacap Technologies
MSFT lost a fraction of the pre-market trade. Shares edged up 0.75% last week to 335.40, hitting a 17-month high, not far from the all-time high of November 2021.
Google stock fell early Monday. Last week, shares rose 6 cents to 124.67. Google shares have been trading tightly for a few weeks at a 52-week high. It has almost three tight weeks, just missing out because one of the weekly gains was 1.51%, just topping the 1.5% high. But investors could use a move above the May 22 high at 126.43 as a place to slightly strengthen their position.
META stock was down nearly 1% ahead of Monday’s open, with Oppenheimer raising its META price target to 350 from 285. Facebook’s parent company jumped 4% last week to 276.21, a new plus. high of 52 weeks.
Nvidia stock fell 1% in premarket stock. Shares were up 1% last week at 393.27 but rose above Tuesday’s all-time intraday high at 419.38. NVDA stock, up 169% in 2023 and 96% above its 200-day mark, could benefit from an extended break.
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Tesla Stock
Tesla stock advanced more than 1% on Monday morning. Shares jumped 10.8% to 213.97 last week. On Friday, TSLA stock moved above a buy point of 207.89 from what is either a cup or a double-bottom base. The electric vehicle giant has advanced on above-average volume for five consecutive sessions, following few such days in the previous three months.
Tesla sold 77,695 Chinese-made vehicles in May, including exports, according to data released Monday by the China Passenger Car Association. This is an increase of 2.4% compared to April. A breakdown of local sales versus exports will come in a few days.
Tesla now says its base Model 3 gets the full $7,500 US tax credit, along with all other Model 3 and Model Y vehicles.
Palo Alto Stock
PANW stock jumped 5% early Monday. Stocks last week just broke through a long-term consolidation.
Palo Alto Networks will join the S&P 500 before the June 20 open, replacing Dish Network (FLAT).
This is part of a number of changes to the S&P indices. Doximity (DOC), Berry Global (BERY), BWX Technologies (BWXT), Planet Fitness (PLNT) and Crown assets (CCK) are among those joining the S&P MidCap 400. Craftsman Partners Asset Management (APAM) and CarGurus (CARG) are among the new additions to the S&P SmallCap 600.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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