Tesla Stock Jumps 7 Percent After Setting Quarterly Delivery Record
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Tesla reported record vehicle deliveries of 95,200 in the second quarter yesterday, leading to a more than seven percent jump in the stock price in after-hours trading. More than 77,000 of those deliveries were of its mass-market Model 3, the vehicle that most analysts see as key to Tesla's future.
Investor sentiment on the pioneer in electric vehicles has been as volatile as its chief executive Elon Musk this year. The shares were down nearly fifty percent on the year to a low of $177 in early June, but have staged a sharp rebound in the last month. They are up 27 percent since then though they are still down 33 percent for the year.
The broader market has also shown resilience as the Entrepreneur Index™ and the major stock indexes trade at or very near all-time highs heading into the July 4th long weekend. The oft-cited investing adage to sell in May and go away has so far not held true as stock prices surged last month after falling sharply in May. The more than ten-year bull market in stocks -- the longest on record -- faces challenges in the second half of the year, as signs of slowing global growth continue to proliferate.
Bond investors expect a recession. The yield on the 10-year Treasury bond fell to 1.96 percent this week, its lowest level since late 2016. The price of oil is also reflecting concerns about the global economy and demand for energy. Despite the extension of OPEC production cuts and increased tensions in the Middle East, the price of oil has recently fallen back down to the mid-50s after surging in the first five months of the year. Shares in Hess Corp., the only oil and gas producer on the Entrepreneur Index™, are down nearly five percent in the last week, but still up 55 percent this year--one of the best returns on the index in 2019.
Trade relations continue to roil the market as the current state of U.S.-China negotiations remains uncertain. The recent threat of more tariffs on Eurozone goods because of subsidies in the aircraft sector show that President Trump still favors tariffs as a negotiating tool.
Not surprisingly, trade sensitive stocks have been among the most volatile on the Entrepreneur Index™ this year. In the technology sector, it's been a particularly wild ride for semiconductor stocks. Chip companies generally have high proportions of their sales to China and international markets and rely on global supply chains in their business. NVIDIA Corp., a maker of high-end graphics chips, rises and falls on every rumor about U.S.-China trade negotiations. It was down more than two percent yesterday. The stock had a sickening plunge of more than fifty percent late last year but is up over twenty percent this year.
Meanwhile, the FAANG stocks continue to lead the technology sector. While much was made of the fall of the FAANGs last year, they have been among the best performers in the tech space this year. Facebook and Netflix are up 49 percent and 40 percent respectively this year while Amazon.com is up 29 percent. Alphabet Inc. is the only FAANG on the Entrepreneur Index™ to underperform the market, rising 7.3 percent so far this year.
If the bull market is to continue in the second half of this year, economy-sensitive stocks will have to respond. Fedex Corp., one the better barometers of global economic sentiment, has been volatile all year. It fell 1.95 percent yesterday and is now down one percent for the year. Similarly, Ralph Lauren Corp., a premier apparel producer, has pin-balled this year on trade rumors and economic indicators. It is up just 6.6 percent so far.
The next few weeks may be crucial for the stock market in the second half. Companies begin reporting earnings next week and judging by economic indicators in the second quarter, they could be ugly. The Federal Reserve Board meeting later this month is equally important. The market is pricing in a 100 percent chance of a cut in interest rates this month and investors expect several more cuts this year to support the slowing economy. If they don't get want they want, stock prices could suffer.
The Entrepreneur Index™, up 23.5 percent through July 2, is outperforming the major stock indexes this year. The Dow and S&P 500 indexes are up 14.8 percent and 18.6 percent respectively while the Nasdaq Composite is up 22.2 percent.
The Entrepreneur Index™ collects the top 60 publicly traded companies founded and run by entrepreneurs. The entrepreneurial spirit is a valuable asset for any business, and this index recognizes its importance, no matter how much a company has grown. These inspirational businesses can be tracked in real time on Entrepreneur.com.