Tesla Gets a Rival on Wall Street as Traders Await Big Inflation Report

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Tesla, one of the most active stocks in the market, suddenly has a rival among traders.

Rivian Automotive (RIVN) announced better-than-expected deliveries last week. That gave Wall Street confidence the maker of electric pickups and SUVs is finally overcoming production issues and is ready to ramp up production. Traders drove the stock up by 51 percent, its biggest weekly gain ever.

RIVN isn’t a member of the S&P 500 or the Nasdaq-100. If it were, last week’s surge would have ranked it at the top of both indexes by a wide margin. The stock also jumped to No. 2 on TradeStation’s list of most active symbols in July from 35th in June. (TSLA continues to hold the top spot this month.)

Rivian Automotive (RIVN), daily chart, with select moving averages.

The breakout occurred in the holiday-shortened week of Independence Day. The broader S&P 500 slipped 1.2 percent but remained in a tight range near its 17-month high. It was only the second drop in the last eight weeks.

‘Golden Path’

“The Fed’s overriding goal right now is to get inflation down,” Austan Goolsbee, president of the Chicago Federal Reserve told CNBC on Friday. “We’re going to succeed at it, and to do that without a recession would be a triumph. That’s the golden path, and I feel like we’re on that golden path.”

Goolsbee, a voting member of the central bank’s monetary committee, spoke after job growth in June missed estimates. (The previous two months were also revised sharply lower.) The news helped ease concerns that the Fed would need to keep hiking rates aggressively. It also raises the stakes for Wednesday’s inflation report, which is expected to hit a two-year low around 3.2 percent. Could the historic price spiral from the coronavirus pandemic be finally ending?

Investors may think so. Last week, for example, the American Association of Individual Investors reported that over 46 percent of respondents in its regular poll thought stocks would advance over the next six months. It was the highest reading since November 2021.

Energy, Banks

Ten of the 11 major sectors last week declined, according to TradeStation data. However oil-servicing companies (a subset of energy) and regional banks (a subset of financials) rallied. Both have underperformed this year, which may suggest investors are rotating to new stocks after several months of favoring technology.

Real estate investment trusts, another laggard, was the only positive sector last week.

Health care, homebuilders, materials and technology had some of the larger declines.

Fidelity National Information (FIS) jumped after agreeing to sell a majority stake in its business-payments division Worldpay.

S&P 500, daily chart, with select indicators.

Charting the Market

The S&P 500 may be showing moderate signs of fatigue after hitting a new 52-week high on June 30.

Two oscillators recently fell despite the broader index climbing: moving average convergence/divergence (MACD) and the rate of change. This may be considered “bearish divergence.”

Biggest Gainers in the S&P 500 Last Week
Schlumberger (SLB)+8.6%
Fidelity National Information (FIS)+8.4%
Zions Bancorp (ZION)+7.9%
Halliburton (HAL)+7.9%
Global Payments (GPN)+7.4%
Source: TradeStation Data

Next, fewer index members are now above their 20-day moving averages than are above their 50-day moving averages. This relationship, derived from TradeStation custom data, has often anticipated turns in the S&P 500.

Chart watchers may believe prices have established a higher range. Potential support could be around 4325, near last August’s high and the June 26 low. They could also view roughly 4510 as resistance because it was a peak in late April 2022.

The Week Ahead

This week brings key inflation data and the start of earnings season.

Today’s main item is a speech by Fed governor Michael Barr. No big events are scheduled for tomorrow.

The consumer price index (CPI) at 8:30 a.m. ET on Wednesday could be the main event of the week. Economists could pay special attention to the shelter component of the report because it pushed inflation higher last year and now could be easing. Crude-oil inventories are also due.

Biggest Decliners in the S&P 500 Last Week
Generac (GNRC)-8.8%
Align Technology (ALGN)-6.8%
KLA (KLAC)-6%
Merck (MRK)-5.5%
Nike (NKE)-5.4%
Source: TradeStation Data

Thursday features initial jobless claims and the producer price index (PPI). PepsiCo (PEP) and Delta Air Lines (DAL) announce quarterly results.

Friday brings consumer sentiment and earnings from JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and UnitedHealth (UNH).

Earnings get more active the following week as companies like Bank of America (BAC) and Netflix (NFLX) report.

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