Stocks traded flat today as H2 2023 got underway.
The S&P remained unchanged through noon while the Dow endured a minor dip of 28 points or 0.1%. The Nasdaq Composite similarly traded flat with volume restricted during a shortened holiday session.
Tesla emerged as the star of the day, its shares skyrocketing more than 6% after the company reported production and delivery numbers that surpassed analysts’ expectations. Other players in the electric vehicle sector, including Rivian, Fisker, and Lucid, followed suit with notable increases.
Tesla’s Q2 2023 report boasted a total of 466,140 vehicles delivered, while production ramped up to 479,700, beating analysts’ projections. The results reflect an impressive 83% YoY rise in deliveries for the automaker, led by Elon Musk, following increased manufacturing capacity and heightened production at its vehicle assembly plant in Austin, Texas.
Stocks come off the back of a stellar start to 2023. The Nasdaq Composite closed Friday marking its most significant first-half gain since 1983, surging 31.7%. The S&P 500 jumped 15.9%, scoring its best first-half performance since 2019. The Dow Jones Industrial Average trailed with a modest 3.8% climb during the same period.
These gains stemmed from excitement surrounding artificial intelligence, coupled with recent data revealing a better-than-expected economic picture despite higher rates. This uplifted investor sentiment and allayed some Wall Street fears regarding an imminent downturn.
Sam Stovall, Chief Investment Strategist at CFRA Research, noted a shift in investor sentiment: “Investors are saying, ‘you know what, maybe now is the time to alter my mindset from ‘Oh no’ to ‘FOMO,'” referring to the fear of missing out.
“Instead of being overly worried, maybe investors might want to make sure that they don’t miss out on a potentially positive second half now that the first half has offered us a running start.”
However, the ISM’s manufacturing purchasing managers’ index for June fell slightly below expectations, with June’s reading once again falling below 50, signaling declining economic activity. Investors will be closely monitoring the job market data due later this week.
Despite recent optimistic surprises in U.S. macro data, both the ISM and PMI surveys depict the U.S. Manufacturing sector as deep in contraction, with a significant fall in new orders primarily contributing to the sub-50 score.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, provided a somber outlook: “The health of the US manufacturing sector took a sharp turn for the worse in June, adding to concerns over the economy potentially slipping into recession in the second half of the year.”
He attributed this downturn to a severe drop in demand for goods and fading pricing power, among other factors. He concluded, “The focus now turns to the service sector, where inflationary pressures have been more stubborn in recent months amid resurgent post-pandemic demand.”
Trading closes early today at 1 p.m. ET Monday due to the Fourth of July holiday, with markets also observing a closure tomorrow. Investors will likely find out Wednesday whether this is truly the start of another rally, or if the market’s seasonal tendency will take hold, driving equities lower to finish out the rest of the summer.
