Stock recap and outlook for E.V. Stocks, Energy & precious metal and Major Deals etc.
Stock recap
WEEKLY STOCKS RECAP
IN EV SPACE
Tesla shares plummet as ramp tilts downward.
After CEO Elon Musk’s cautious comments and a top- and bottom-line miss of $0.66 per share and $23.35 billion in revenue, Tesla (NASDAQ:TSLA) shares plummeted Thursday.
The company’s worst sales shortfall in nearly three years cast doubt on Musk’s claim that Tesla was “recession-resilient” despite price cuts.
Musk said that despite substantial price cuts, Tesla would delay its scheduled expansion of the Mexican factory until the economy is more stable due to rising borrowing costs and their potential impact on Tesla vehicle accessibility.
Detroit car titans General Motors (NYSE:GM) and Ford (NYSE: NYSE:F) have taken a cautious approach to growing their EV production capacity, citing economic uncertainty and a likely demand fall.
GM postponed the manufacturing of the Chevrolet Silverado and GMC Sierra electric pickup trucks at a Michigan plant by a year on Tuesday, citing EV market stagnation.
Ford recently stated it would temporarily reduce one of its three shifts at its electrified F-150 Lightning assembly plant. The business had already slowed its EV expansion and shifted funding to commercial vehicles and hybrids.
Tesla’s warning caused its shares to fall more than 9% on Thursday, reflecting mounting concerns about the company’s growth trajectory.
Even though its gross margin is shrinking, Tesla is likely to cut prices to reach its annual 1.8 million vehicle delivery goal: The figure dropped from 25.1% last year to 17.9% between July and September.
That decrease and Tesla’s November 30 Cybertruck debut at its Texas Gigafactory have raised investor concerns about Tesla’s profitability.
Due to concerns about Tesla’s capacity to maintain its rapid growth, 10 analysts have lowered their price targets, with the median view at $260, according to LSEG data.
For the week, TSLA shares fell 15.4% to $211.99.
OSHA not fine with GM battery venture
General Motors and LG Energy Solution’s joint venture battery plant in Ohio, Ultium Cells, was fined $270,000 by OSHA.
The proposal follows an examination that found the corporation failed to teach personnel in safety and emergency response processes and violated federal PPE rules, exposing workers to dangers.
Ultium Cells stressed safety and requested an OSHA hearing in response to the advice.
OSHA also issued a hazard alert letter encouraging the company to take voluntary measures to reduce metal dust and protect employees from it.
The safety administration required Ultium to install machine guarding, train personnel on hazardous energy control and emergency response, and make other changes.
Following the June 27 fire at Ultium, OSHA is inspecting the site and investigating three other matters. One probe involves an August pressure gauge failure that leaked battery slurry on the production floor, exposing workers to toxins.
The plant has received 11 OSHA penalties since its 2022 founding.
GM shares fell 0.76% to $29.65 after hitting $30.58 on Tuesday.
Energy & precious metal Settlement and outlook
Crude Oil Market Settlements and Activity
WTI, December crude for New York trading closed Friday at $88.30, down 29 cents, or 0.3%. WTI hit $89.85 earlier in the day. The US crude standard increased 2% this week, adding to its 6% rise last week.
The most active December contract, London-traded Brent crude, closed Friday at $92.51, down 22 cents, or 0.2%. The global crude benchmark rose 1.4% after rising 7.5% the week before.
Technical Outlook for WTI
Sunil Kumar Dixit, chief technical strategist at SKCharting.com, thinks WTI’s immediate support is $87.25, where the 5-Day EMA and Daily Middle Bollinger Band meet.
“A break below this zone will extend the decline to the horizontal support of the 100-week SMA, or Simple Moving Average, of $86.30.
Dixit said the US crude benchmark must remain above the 50 Day-EMA of $85.30 to recover.
Breaking below this zone will turn momentum bearish and could revisit the 50-week EMA of $81.50.
Above $87.25, consolidation will favor a retest of $89.85, from which WTI could target $95 and $96.50.
Gold Market Settlements and Activity
Gold returned to $2,000 for the first time since August and set a three-month high on Friday as investors sought refuge from the Middle East’s latest war and the Federal Reserve’s reluctance to raise US interest rates.
“Gold’s safe haven status has been questioned in recent years, but times like this highlight that in times of significant uncertainty, traders look for assets with a track record,” said OANDA analyst Craig Erlam.
Gold is favored as US yields rise rapidly, diminishing Treasuries’ short-term appeal. Geopolitical and economic uncertainty, which could affect inflation and interest rates, is boosting gold’s appeal for now.
December, gold’s most active Comex futures contract, closed at $1,993.10 per ounce after settling at $1,994.40, up $13.90, or 0.7%. After a four-day surge, the benchmark gold futures contract rose $52.90, or 2.7%, adding to its 5.2% gain from the previous week.
Some traders prefer spot gold to futures, which finished at $1,981.64, up $7.23, or 0.4%, from a session high of $1,997.20. Real-time bullion spot prices rose 2.4% on the week, adding to the previous week’s 5.4% rise.
The US Dollar Index and bond yields, as measured by the 10-year Treasury note, fell from their highs this week, allowing gold to recover its status as the chosen safe haven.
Gold Spot Price Outlook
Dixit reported that the gold surge had caught SKCharting’s forecasted spot price target resistance of $1,998 before pulling back to $1,974 and closing the Day/Week at $1,981.
He predicted $1,974 will be immediate minor support in the coming week, followed by $1,985 as the first minor hurdle.
Below $1,974, gold will consolidate toward $1,968, and a strong break below that level will produce a protracted slide to $1,958-$1,954. Failure to hold above that level will allow a test of $1,945-$1,935, the primary support zone.
“It is important to remember that current market mood is mainly driven by prevailing risk on and risk off sentiments from the Middle East crisis, and situations can keep evolving with crazy twists and turns,” added Dixit.
A sustained break and day close over $1,998 will launch a significant bullish surge to $2,080 with several resistances at $2018-$2035-$2050.”
Natural Gas Market Settlements and Activity
From months of misfortune, the natural gas bull is facing new challenges.
USA’s top indoor heating and cooling fuel rebounded to $2 on Friday after holding above $3 since Oct. 4. November gas on the New York Mercantile Exchange’s Henry Hub lost 10.4% last week, up from 3.1% the week before.
November gas fell 5.8 cents to $2.899 Friday.
The gas market suffered after a larger-than-expected weekly storage addition of 97 billion cubic feet vs 80 bcf.
Future natural gas prices
Dixit reported that gas fell from $3.47 to $2.88 due to opposition from the 50-week EMA.
“Immediate resistance shifts to $3.01, a level that needs to be reclaimed, followed by $3.18, for a bullish rebound that could retest $3.47 and challenge the 200-week SMA of $3.78,” he said.
“If this doesn’t happen and gas breaks below $2.87, $2.66 is possible.”
Big Deals
Wyndham rejects Choice Hotels’ $7.8 billion acquisition deal.
Choice Hotels International (NYSE:CHH) offered $90 per share in cash and shares to acquire Wyndham Hotels & Resorts (NYSE:WH) on Tuesday after six months of merger talks. Wyndham declined.
Choice offered $49.50 in cash and 0.324 Choice common stock for each Wyndham share, giving Wyndham a fully diluted equity value of $7.8 billion. Including Wyndham’s net debt, the proposed acquisition is worth $9.8B.
“Choice’s offer is underwhelming, highly conditional, and subject to significant business, regulatory, and execution risk,” said Wyndham board chairman Stephen Holmes. “Choice has been unwilling or unable to address our concerns.”
Choice Hotels International fell nearly 8% this week, while Wyndham Hotels & Resorts rose 9%.
Southwestern Energy rises 8% on Chesapeake Energy merger rumors
Reuters reported Tuesday that Chesapeake Energy (NASDAQ:CHK) began takeover talks with Southwestern Energy (NYSE:SWN), citing sources.
Southwestern Energy shares rose almost 8% on Tuesday after this announcement.
If this merger goes through, the merged corporation would surpass EQT (NYSE:EQT) as the largest U.S. natural gas exploration and production company by market cap. Including debt, Southwestern is worth $12B.
Sources say these conversations are still early, and Chesapeake may consider other takeover possibilities and choose another target.
Jazz Pharmaceuticals considers strategy
Bloomberg News reported late Thursday that Jazz Pharmaceuticals (NASDAQ:JAZZ) is considering selling the entire firm, citing sources.
The report states that Jazz Pharma is considering separating its marijuana section from its oncology company, among other strategic steps, including a sale. The business bought marijuana drugmaker GW Pharmaceuticals for $7.2B in cash and equity in 2021.
Friday’s closing price values the corporation at $8.43B.
For the week, shares rose 3.4% to $133.55.
Novo Nordisk to buy hypertension medication for $1.3B
On Monday, Novo Nordisk (NYSE:NVO) announced its deal to acquire ocedurenone, a medication for uncontrolled hypertension with cardiovascular and kidney uses, from KBP Biosciences for up to $1.3B, according to Reuters.
Novo Nordisk stated that this acquisition supports their strategy goal of using innovative medication approaches to treat other significant chronic diseases beyond diabetes.
The purchase is expected to finalize by the end of the year, and Novo Nordisk said it will not affect its 2023 operational profit estimate.
Weekly Earnings Calendar
Monday, Oct 23
Tuesday, Oct 24
- Microsoft Corporation (MSFT)
- Alphabet Inc. GOOGL (GOOG)
- Visa Inc. ((V)
- The Coca-Cola Company (KO)
- Danaher Corporation (DHR)
- Texas Instruments Incorporated (TXN)
- Verizon Communications Inc. (VZ)
- General Electric Company (GE)
- Raytheon Technologies Corporation (RTX)
Wednesday oct 25
- Meta Platforms, Inc. (FB)
- Thermo Fisher Scientific Inc. (TMO)
- T-Mobile US, Inc. (TMUS)
- International Business Machines Corporation (IBM)
- ServiceNow, Inc. (NOW)
- The Boeing Company (BA)
- Automatic Data Processing Inc. (ADP)
- CME Group Inc. (CME)
Thursday Oct 26
- Amazon.com, Inc. (AMZN)
- Mastercard Incorporated (MA)
- Merck & Co., Inc. (MRK)
- Comcast Corporation (CMCSA)
- Intel Corporation (INTC)
- Caterpillar Inc. (CAT)
- United Parcel Service, Inc. (UPS)
- Honeywell International Inc. (HON)
- Bristol-Myers Squibb Company (BMY)
Friday, Oct 26
- Exxon Mobil Corporation (XOM)
- Chevron Corporation (CVX)
- AbbVie Inc. (ABBV)
For Details
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