Shares rose 5.3% Wednesday, and they are up another 2.8% in premarket trading Thursday. That’s the what and the when. The why is a little harder to figure.
Tesla stock hasn’t been doing much—as Barron’s pointed out just before the 5% rise—and big stock catalysts, such as production from new plants, look months away.
Still, there are a couple potential explanations for Wednesday’s big move.
put out its annual American-Made Index, a list of cars that contribute most to the American economy. The Tesla Model 3 was at the top. The Tesla Model Y was third. (Japanese-branded cars took five of the top 10 spots. They are assembled in the U.S.).
It’s a nice feather in the cap for Tesla and the first time an all-electric car has topped the 16-year old list. Still, it isn’t really
news. Investors know the Model 3 and Y vehicles are made in the U.S.
A better reason might be Tesla stock has underperformed while tech stocks have rallied. Coming into Wednesday, the
was up for the month but Tesla stock, like the
Dow Jones Industrial Average,
was down. Now Tesla stock is up for the month and right in line with the performance of the technology-heavy index—adjusted for Tesla’s typical trading patterns. That makes a lot more sense.
Tesla stock, however, will likely stay range bound until more good—or bad—news hits.
Next up is second quarter deliveries, due in about a week. More than 200,000 cars delivered would be a win for shares. Even if they look like they’re already winning.
*** Join Barron’s senior managing editor Lauren R. Rublin, healthcare reporter Josh Nathan-Kazis, and RBC analyst Luca Issi Thursday at noon to discuss gene therapy and other innovations in biotechnology. Sign up here.
Biden to Meet With Senators on Tentative Bipartisan Infrastructure Deal
A group of 20 Democratic and Republican senators said late Wednesday that it had agreed on the framework of an infrastructure spending bill with a team of White House negotiators, even though details remain to be worked out.
- The huge spending effort in broadband, roads, utilities, and other federal projects would amount to nearly $600 billion of extra spending over five years, according to media reports.
- The group’s members spent days trying to find ways to finance the package that would abide by President Biden’s pledge not to raise taxes on households making under $400,000. Republicans have resisted Biden’s plans to raise corporate taxes.
- Biden invited the group of lawmakers to the White House on Thursday, his spokesperson Jen Psaki said, acknowledging that negotiators had made “progress towards an outline of a potential agreement.”
What’s Next: Provided their plan gets Biden’s support, the 20 will next have to convince their Senate colleagues of the merits of their hard-fought compromise.
CDC Panel Sees Link Between Rare Heart Condition and Covid-19 Vaccines
A Centers for Disease Control and Prevention advisory panel said Wednesday that there is a “likely association” between rare incidents of heart inflammation in 16- to 24-year-olds shortly after they received their second dose of Covid-19 vaccines, CNBC reported.
- More than 1,200 cases, mostly in people 30 and younger who received their second shot of
vaccines, have been reported. Myocarditis is inflammation of the heart muscle, and pericarditis is inflammation of the membrane around the heart.
- Myocarditis was reported most often within one week after the second shot, with chest pain as the most common symptom, said Dr. Grace Lee, chair of the panel’s safety group. The highest share of cases were among men aged 30 and younger.
- Of more than 307 million shots of both mRNA vaccines administered, 267 cases of myocarditis or pericarditis were reported after one dose and 827 were reported after two doses, as of June 11, the CDC said.
- “This is still a rare event,” the CDC’s Dr. Tom Shimabukuro said. Only 12.6 cases of heart inflammation were reported per 1 million doses of both vaccines. Of the 295 people who developed symptoms and were discharged, 79% have fully recovered.
What’s Next: The CDC said the benefits of vaccinations outweigh the risks, and Covid cases among younger people are rising. Just 13.6% of adults in the U.S. between 18 and 24 have had at least one vaccine dose, compared with 26% of people ages 50 to 64.
—Janet H. Cho
Banks Await Results of Their Annual Stress Tests
The Federal Reserve will release the results of its annual bank stress tests after markets close today. Banks are expected to pass comfortably, opening the door for an easing of restrictions on buybacks and dividends.
- The annual ritual, begun after the 2008 financial crisis, tests how well 23 large banks would withstand various extreme scenarios and still have capital on hand. Weak results would argue against allowing a bank to return money to shareholders.
- Stress scenarios include a stock market crash and a sharp drop in economic output. Banks boosted loss reserves last year and had to suspend buybacks and cap their dividends.
- The Fed hosted a second round of testing late last year, and lenders performed well as vaccines rolled out and hope emerged that the economy would reopen. In March, the Fed said it could ease restrictions after this year’s tests.
- Piper Sandler projects dividends will rise 7.6% from current levels. Barclays analysts project nearly $200 billion will be paid to bank stock inventors in buybacks and dividends over the next year.
What’s Next: Big banks flourished over the last year on a boom in dealmaking, but market conditions are slowing. JPMorgan CEO Jamie Dimon said last week that second quarter trading revenue could drop 38% compared to last year’s heightened levels.
—Carleton English and Liz Moyer
ViacomCBS, Roku Shares Jump on M&A Speculation
- The Wall Street Journal reported in a broad profile of
CEO Brian Roberts that he is scoping out options that include a potential merger with ViacomCBS or an acquisition of Roku.
- Representatives from ViacomCBS, Comcast, and Roku declined to comment. Shares of ViacomCBS and Roku jumped after the story was published. Comcast shares dipped.
- With streaming content libraries in focus, the entertainment business has been busy.
earlier this week signed a content deal with film director Steven Spielberg’s Amblin Partners.
last month said it agreed to buy film studio MGM Holdings, though that deal will be reviewed by the Federal Trade Commission.
also unveiled plans to spin off its WarnerMedia content to focus on its core telecom business.
What’s Next: BofA Global Research analyst Jessica Reif Ehrlich suggested ViacomCBS as a merger target for Comcast last month. But such a deal would likely require a spinoff of CBS, given Comcast already owns NBC.
Biden Announces Antigun Violence Strategy Including Zero Tolerance for Illegal Gun Sales
President Joe Biden called for sensible gun-control measures as part of his proposals to reduce gun violence, including a zero-tolerance policy for gun dealers who fail to run required background checks or sell to prohibited buyers. He said 90% of the guns found at crime scenes come from 5% of dealers.
- Biden said state, local and tribal communities seeing a pandemic-related surge in gun violence can use $350 billion in Covid-19 relief funds to hire more police, fund violence intervention programs, or to buy technology and other law enforcement equipment.
- The administration wants to beef up the Bureau of Alcohol, Tobacco, Firearms and Explosives’ enforcement power and has launched five strike forces to stem the flow of firearms in New York, Chicago, Los Angeles, San Francisco, and Washington, DC.
- The pandemic and rise in illegal guns has led to 30% increase in homicides and 8% increase in gun assaults and large cities in 2020, the White House said. Homicides rose 24% in the first quarter compared with the first quarter last year.
- The administration repeated its call on Congress to increase the ATF’s funding, and it will introduce efforts to improve coordination with state and local officials.
What’s Next: Biden has urged Congress to overhaul policing procedures as part of the George Floyd Justice in Policing Act, but the bill has stalled in Congress. He has also signed executive orders to curb the spread of “ghost guns” assembled from kits and the arm braces used to steady pistols.
—Janet H. Cho
Child tax credit payments are starting—when does it make financial sense to opt out of getting this money?
Just as the Internal Revenue Service is gearing up to distribute millions of monthly child tax credit payments to parents, some of them may want to consider skipping the money now—or brace for a tax bill later, financial experts say.
The rules on the advance payments for the Child Tax Credit (CTC) this year might make parents who are near the income eligibility limits choose to opt out so they can avoid repaying the sum at tax time next year.
Single filers making up to $75,000, individuals making up to $112,500 when filing as head of household and married couples filing jointly that earn up to $150,000 are eligible for the payments.
Parents already near these thresholds need to think especially hard if they are getting raises this year and better-paying jobs that will knock them out of income eligibility, they say.
“People have to look at this carefully. They don’t want to be unpleasantly surprised,” said Marianela Collado, co-owner and CEO of Tobias Financial Advisors.
The IRS on Tuesday unveiled the online portal where households can opt out of receiving the advance payments, which will come in monthly installments.
The first payments go out July 15 and June 28 is the deadline to skip the July payment, the IRS says. Aug. 2 is the deadline to skip the Aug. 13 payment and Aug. 30 is the last day to skip the Sept. 15 payment.
For now, someone cannot opt back into receiving the money after they have opted out. The ability to re-enroll will start in late September, according to the IRS.
Read more here.
—Newsletter edited by Liz Moyer, Mary Romano, Matt Bemer, Ben Levisohn