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The key economic release of the holiday-shortened week in the U.S. will be the jobs report on Friday. Economists expect payroll gains to slow from 272K in May to 200K in June, and the unemployment rate to stay level at 4.0%. Average hourly earnings growth is expected to taper to +0.3% month-over-month pace. The Friday report will be preceded by JOLTS and ADP data on Tuesday and Wednesday, respectively. Bank of America thinks the U.S. labor market is gently cooling as Americans continue to see jobs as broadly easy to get. Of note, the recent spike in young adult unemployment has shown signs of subsiding.
The earnings schedule for the holiday week is extremely light, but Constellation Brands (NYSE:STZ) and Polestar Automotive (NASDAQ:PSNY) are both due to spill numbers. As for events, the opening of Universal Studio’s (CMCSA) Despicable Me 4 is one of the few expected catalysts. On a broader scale, corporate buybacks are likely to fade next week as earnings blackout periods ramp up. It is estimated that companies representing almost half of the S&P 500 Index market cap will be in blackout periods by the end of the week. While the U.S. markets are mainly snoozing through the holiday week, across the Atlantic, the first round of the French legislative elections and the UK general election could have implications for European stocks.
Earnings spotlight: Tuesday, July 2 – MSC Industrial (MSM), Polestar Automotive (PSNY), and Simulations Plus (SLP). See the full earnings calendar.
Earnings spotlight: Wednesday, July 3 – Constellation Brands (STZ). See the full earnings calendar.
Volatility watch: Options trading volume has moved much higher on Grindr (GRND) and Virgin Galactic (SPCE). The most overbought stocks per their 14-day relative strength index include United Therapeutics (UTHR), Insmed (INSM), and Alimera Sciences (ALIM). The most oversold stocks per their 14-day Relative Strength Index include Ovid Therapeutics (OVID), G1 Therapeutics (GTHX), and Shattuck Labs (STTK). Short interest is still sky-high on Applied DNA Sciences (APDN) and Zapp Electric Vehicles (ZAPP) heading into next week’s action. Trump Media & Technology (NASDAQ:DJT) is expected to stay volatile as well. Shares of DJT trade more than 50% below their highs, but have seen a jump in interest on Reddit’s WallStreetBets.
IPO watch: There are no new IPOs expected to begin trading during the holiday-shortened week. The quiet periods expire on Life360 (LIF), Gauzy (GAUZ), Fly-E Group (NASDAQ:FLYE), Waystar Holding (NASDAQ:WAY), and Rapport Therapeutics (NASDAQ:RAPP) to free up analysts to post ratings. Fly-E and Rapport Therapeutics have both rallied more than 20% from their IPO pricing levels.
Dividend watch: Companies that have an ex-dividend date coming next week include JPMorgan (NYSE:JPM) and Progressive (PGR). The five stocks in the S&P 500 Index with the highest dividend yields are Ford Motor (F), Amcor (AMCR), Hasbro (HAS), Best Buy (BBY), and International Paper (IP). Read through some of the dividend stock picks from Seeking Alpha analysts.
Tesla deliveries preview: Tesla (TSLA) is expected to show a drop in quarterly deliveries when it issues its Q2 update during the first few days of July. The deliveries report will arrive just a few weeks ahead of the company’s full Q2 earnings report. Analysts have been reeling in estimates on Tesla (TSLA) deliveries due to the concerns over consumer demand, as well as registration data from Europe and China. Barclays cut its forecast to 415,000 cars to have been delivered, which would mark an 11% year-over-year decline. RBC Capital Markets slashed its estimate to 410,000 vehicles after having a prior forecast just a few months ago for 533,000 deliveries in Q2. Meanwhile, UBS set its deliveries estimate at 420,000. For comparison, Tesla (TSLA) delivered 386,810 vehicles in Q1 and 466,140 vehicles a year ago in Q2. Tesla’s (TSLA) very highest deliveries tally in a quarter was Q4 of 2023, with 484,507 units delivered. Some analysts think the Q2 deliveries report will be without the usual drama because the company has a high-profile Robotaxi event scheduled for later in the summer. “Compared to Q124 when investor attention was intensely focused on near-term delivery estimates being too high, we see a growing number of investors shifting their outlook to the Robotaxi event on August 8 and the opportunity related to FSD,” noted analyst Ben Kallo. He expects the investor focus to remain skewed towards the long term until the Robotaxi unveiling, which could include details on the low-cost, next-gen vehicle for the masses. Wedbush Securities analyst Dan Ives is also not expecting any major fireworks for the June quarter. Instead, he thinks the seeds for a demand turnaround are starting to take place, which means that it is now about execution for Musk and Tesla heading into the second half and 2025. UBS is more skeptical that the Robotaxi event will be an immediate share price catalyst. While the firm believes that Tesla (TSLA) is making good technological progress on the Robotaxi and Optimus initiatives and is more likely than most to capitalize off the manifestation of AI in the physical world, those developments are seen benefiting the financial model much further out. For its part, Susquehanna thinks Tesla (TSLA) has several tailwinds turning in favor of its stock, which makes it a good time to buy long call options. The derivative strategists at the firm noted volatility in the stock has come down, seasonal trading patterns are looking positive, and shares have been underperforming most of the S&P 500. “Moreover, Tesla is a long-standing favorite among retail investors, further setting it up for gains as the frenzy for meme-stocks returns to the markets,” highlighted Susquehanna’s Christopher Jacobson. On Seeking Alpha, analysts are generally cautious. Dividend Sensei recently highlighted six reasons that TSLA’s robotaxi dreams will likely fail. Before the big robotaxi event, the electric vehicle juggernaut will have to report Q2 earnings. Tesla (TSLA) has a recent track record of missing consensus quarterly estimates more times than beating them. Shares of TSLA have dropped in the week following earnings in three of the last four quarters.
Auto watch: On top of Tesla’s deliveries report, investors will get their hands on deliveries update from NIO (NIO), XPeng (XPEV), Li Auto (LI), Rivian Automotive (RIVN), Lucid Group, and Polestar Automotive (PSNY). Quarterly sales reports from General Motors (GM), Ford Motor (F), Honda Motor (HMC), and Toyota Motor (TM) will also be closely watched. S&P Global Mobility projects new light vehicle sales volume in June to rise 1% year-over-year to reach 1.40 million units. That level of volume would translate to an estimated sales pace of 16.2 million units, which would be the highest monthly mark for this metric since May 2021. While recent events such as the dealer management software cyberattack and stop-sale announcement on certain Toyota and Lexus vehicles could hamper some of the progress realized earlier in the month, June US auto sales are expected to follow up the notable May advance with another solid result. “Supported by growing incentive and inventory levels, the monthly sales pace will have advanced every month in the second quarter and the estimated 16.0 million-unit SAAR average projected for the period would be the highest quarterly mark since Q2 2021,” noted S&P Global analyst Chris Hopson. “Mixed signals regarding the outlook for the second half of the year remain entrenched though, as new vehicle affordability concerns remain prevalent, and inventories are not expected to advance as strongly as they have done over the past 12 months,” he added.
Theme park consolidation: The theme park sector will become narrower next week after the merger between Six Flags Entertainment (SIX) and Cedar Fair (FUN) becomes final. The companies expect the closing to happen on July 1 with the new entity being renamed right after to Six Flags Entertainment Corporation. The stock will begin trading on the New York Stock Exchange on July 2 under the ticker symbol FUN. B. Riley Securities analyst Eric Wold thinks the merger should unlock meaningful value. Wold noted that the combined company’s footprint will help minimize seasonal and weather volatility, with none of the four geographical U.S. regions representing more than 30% of combined park-level EBITDA. “Given the increasing visibility impact that adverse weather conditions can have on attendance, the reduced importance of any one region (or any single park) on pro forma results should help to reduce financial volatility,” he highlighted. In addition, combined season pass offerings are expected to boost visitation levels. As well as creating a more attractive entertainment option for consumers, Wold and his see the potential to generate ~$200M in incremental AEBITDA over the next two to three years, which should help lessen the need for annual price hikes to be passed on to consumers to offset inflation pressures.
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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