Indexes Jump; Software Stock Soars On Buyout

Indexes Jump; Software Stock Soars On Buyout

The Dow Jones rose strongly Friday morning, along with the S&P 500 and Nasdaq. Crude oil futures and Treasury yields rose modestly after tumbling in recent days on recession fears.




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Zendesk (ZEN) soared after agreeing to a buyout, but was well off premarket highs. Meanwhile, Merck (MRK) reportedly is closing in on a takeover of Seagen (SGEN).

FedEx (FDX) rose on bullish earnings guidance, despite missing fiscal fourth-quarter views slightly. FDX stock jumped 9%, moving 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. Electric-vehicle 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 shut down in order to substantially expand production capacity. The EV maker also reintroduced an enhanced Autopilot offering.

Dow Jones Today

The Dow Jones rose 2%. The S&P 500 popped 2.3% and the Nasdaq jumped 2.6%.

The 10-year Treasury yield edged up to 3.08% from 3.07% after tumbling 24 basis points on Wednesday and Thursday.

Crude oil prices rose 2%. Oil is tacking toward its first monthly decline since November.

Copper prices sank 1%, however, after plunging more than 5% on Thursday to a fresh 16-month low. That’s a sign of possible peak inflation but also slowing economic growth.

New-home sales jumped to an annual rate of 696,000 in May from April’s upwardly revised 629,000. Analysts expected a drop to 587,000.


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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 jumped Friday after the enterprise software maker agreed to a 10.2 billion, $77.50-share buyout by private equity firms Hellman & Friedman and Permira.

Shares leapt 28% to above 74. But ZEN stock had spiked more than 50% earlier on takeover buzz.

Zendesk stock had been trading near a two-year low.

Meanwhile, Merck is stepping up negotiations to buy biotech Seagen, the WSJ reported. SGEN stock rose rose 2%, after jumping last week on reports of talks. Seagen ended Thursday with a $32 billion valuation.

Merck rose a fraction.


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China Stocks

Li Auto stock continued its powerful run on an upcoming new model and expectations of extended China EV subsidies. LI stock popped nearly 4%. 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 5% and Nio stock 3%, both moving toward their 200-day moving averages.

BYD stock edged higher, just below 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 edged higher, already above its 200-day.


Tesla Vs. BYD: Which EV Giant Is The Better Buy?


Tesla Stock

Tesla stock rose 4%, back above its 21-day line. It remains 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 boosting capacity the plant, 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.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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