Dow Jones futures rose solidly Friday morning, along with S&P 500 futures and Nasdaq futures. Crude oil futures and Treasury yields rose modestly after tumbling in recent days on recession fears.
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Zendesk (ZEN) skyrocketed on buyout buzz, while Merck (MRK) reportedly is closing in on a takeover of Seagen (SGEN).
FedEx (FDX) rose on bullish earnings guidance, despite missing fiscal Q4 views slightly. FDX stock rose jumped before the open, signaling a move above its 200-day line.
U.S.-listed Chinese stocks continued to do well, with Li Auto (LI), Xpeng (XPEV) and Nio (NIO) running higher. EV giant BYD (BYDDF) is on the cusp of a breakout. Meanwhile, Alibaba (BABA) and Pinduoduo (PDD) were coming up amid growing optimism about China’s economy after painful Covid lockdowns.
Tesla (TSLA) rose slightly as its Shanghai plant prepares to shutdown in order to substantially expand production capacity. The EV maker also reintroduced an enhanced Autopilot offering.
Dow Jones Futures Today
Dow Jones futures were 0.7% above fair value. S&P 500 futures climbed 0.7% and Nasdaq 100 futures popped 0.8%.
The 10-year Treasury yield rose to 3.11% from 3.07% after tumbling 24 basis points on Wednesday and Thursday.
Crude oil prices rose 2%, putting West Texas Intermediate futures above $106 a barrel. Oil is tacking toward its first monthly decline since November.
Copper prices fell 1%, however, after plunging more than 5% on Thursday to a fresh 16-month low.
Remember that premarket action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally Thursday
The Dow Jones Industrial Average rose 0.6% in Thursday’s stock market trading. The S&P 500 index climbed 0.95%.
The Nasdaq composite jumped 1.6%, a strong advance on day 4 of its rally attempt. But Nasdaq volume was fractionally lower vs. the prior session, according to IBD data. So there was no follow-through day to confirm the new rally attempt.
Even with this week’s gains, the Nasdaq has only managed to peek above its 10-day moving average, while the S&P 500 and Dow Jones are right at that level. All are below their 21-day moving averages as well as their 50-day lines.
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Buyout Buzz
Zendesk stock shot up 49% early Friday after The Wall Street Journal reported Thursday night that a private equity buyout is close. Potential buyers include Hellman & Friedman and Permira. ZEN stock had a $7.1 billion market cap as of Thursday’s close, trading near a two-year low.
Several cybersecurity buyouts have taken place over the past year.
Meanwhile, Merck is stepping up negotiations to buy biotech Seagen, the WSJ reported. SGEN stock rose 4% early Friday, after jumping last week on reports of talks. Seagen ended Thursday with a $32 billion valuation.
Time The Market With IBD’s ETF Market Strategy
China Stocks
Li Auto stock continued its powerful run on an upcoming new model and expectations of extended China EV subsidies. LI stock popped 4% before the open. On Thursday, Li Auto stock jumped 6.6% to 39.24 on Thursday, running past a 37.55 buy point from a long, very deep consolidation. But LI stock closed slightly extended from the buy point and 54% above their 50-day moving average.
Xpeng stock rose 4% and Nio stock 1%, both moving toward their 200-day moving averages.
BYD stock, which is not yet trading, is on the cusp of a 39.81 buy point from a 48%-deep cup-with-handle base, according to MarketSmith analysis.
Meanwhile, Alibaba stock rose 3%, moving toward its long-sliding 200-day line. Pinduoduo stock gained 3%, already above its 200-day.
Tesla Vs. BYD: Which EV Giant Is The Better Buy?
Tesla Stock
Tesla stock rose a fraction before the open, trying to get above its 21-day line, but still deep in a long, messy consolidation.
Tesla reportedly will shut Model Y output at its Shanghai plant for two weeks at the start of July, Bloomberg reported. It’ll then shut its Model 3 line for 20 days starting July 18. After those upgrades, Tesla Shanghai’s Model Y production capacity will rise to 14,000 per week from about 11,000. Model 3 capacity will climb to 7,700 per week from 5,500.
Meanwhile, Tesla is reintroducing an Enhanced Autopilot offering for $6,000. Its features sit in between that of the standard Autopilot and the $12,000 Full Self-Driving.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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