The Dow Jones fell slightly in Monday morning trading, while the S&P 500 index and Nasdaq composite edged higher following last week's big gains. Crude oil prices rose on a surprise Saudi Arabia production cut. Meanwhile, Apple is expected to have a big product reveal, with Tesla and Palo Alto Networks also rallying.
With the debt ceiling now raised, the Treasury is set to issue a massive amount of short-term T-bills starting Monday.
Apple is rumored to show off its mixed-reality headset Monday, with one analyst calling the annual WWDC event a "flex-the-muscles moment" for the Dow tech giant. AAPL stock climbed slightly, hitting a new all-time high.
Among other megacap stocks, Google parent Alphabet, Microsoft and Meta Platforms edged higher. Nvidia tilted lower. TSLA stock rose modestly amid strong China sales, after breaking out into a buy zone on Friday.
Meanwhile, PANW stock jumped on news that it will be added to the S&P 500, among many looming changes to the Standard & Poor's indexes.
Big banks may have to boost capital levels by as much as 20%, The Wall Street Journal reported Monday, one of many steps regulators may take to beef up the banking system. Big bank stocks were modestly active in the premarket.
Immunogen rose 7% after the biotech reported positive results for its ovarian cancer drug in a late-stage trial.
Tesla stock joined IBD Leaderboard on Friday, joining META stock and Palo Alto Networks. Microsoft stock is on IBD Long-Term Leaders. PANW stock is on the IBD Big Cap 20.
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Dow Jones Today
The Dow Jones Industrial Average fell 0.25%. The S&P 500 tilted higher and the Nasdaq rose 0.1%.
The ISM non-manufacturing index for May, released at 10 a.m. ET, fell 1.6 points to 50.3, just above the break-even 500 level. Economists had expected the services index to edge up 0.1 point to 52.
Oil Rises On Saudi Output Cut
U.S. crude oil prices rose less than 1% to $72 a barrel, well off early highs. Saudi Arabia said Sunday that it will unilaterally cut production by 1 million barrels per day in July. OPEC+ also agreed Sunday to extend current output levels through 2024.
Weaker-than-expected China demand and excess production by Russia have combined with sharp pressure placed on markets by short sellers, pushing crude oil prices toward 52-week lows. OPEC officials had warned short sellers of action ahead of Sunday's meeting.
Last week, crude oil futures fell 1.3% to $71.74 a barrel as shorts piled in ahead of the meeting, but prices did bounce 2.3% on Friday.
Treasury Issuance
With President Biden signing the debt-ceiling deal, the Treasury Department now will rush to issue new short-term debt. The Treasury could auction off some $170 billion worth of T-bills on Monday.
That could roil T-bill rates, though markets were well aware that the sales were coming. Further pent-up Treasury sales will quickly follow. The renewed Treasury issuance will absorb substantial market liquidity, after offsetting much of the Fed's quantitative tightening in recent months. That could affect stocks.
The 10-year Treasury yield dipped to 3.67%, reversing modest early gains. The benchmark yield fell 13 basis points to 3.69% last week. T-bill rates edged lower.
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Stock Market Rally
The stock market rally last week showed strong, broad gains, especially Friday.
The Dow Jones Industrial Average leapt 2% in last week's stock market trading, reclaiming its 50-day line Friday after testing its 200-day line intraday Thursday. The S&P 500 index rose 1.8%, decisively clearing its 2023 range. The Nasdaq composite popped 2%, hitting a 13-month high. The small-cap Russell 2000 jumped 3.3%, roaring back above its 200-day line.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF popped 2.1%. MSFT stock is a major IGV holding. PANW also is a top-10 stock for IGV. The VanEck Vectors Semiconductor ETF slipped 0.8%. NVDA stock is a huge SMH component.
Reflecting more-speculative story stocks, ARK Innovation ETF leapt 6.45% last week and ARK Genomics ETF jumped 4.9%. Tesla stock is the No. 1 holding across Ark Invest's ETFs.
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Apple Mixed-Reality Headset
Apple is expected to release its long-awaited mixed-reality headset during a 10 a.m. PT keynote presentation at its annual Worldwide Developers Conference. Possibly called Reality Pro, the headset would be the tech titan's first new hardware product line since the Apple Watch in 2015.
But the price tag, reportedly around $3,000, could deter buyers and limit its mass-market appeal. Meta Platforms recently unveiled its latest Meta Quest headset. Other rivals include the Microsoft HoloLens as well as offerings from HTC and Sony.
Apple also is expected to detail the latest operating systems for the iPhone, iPad, Mac, Apple TV and Apple Watch. Chief Executive Tim Cook also could discuss Apple's AI efforts.
"We expect WWDC to be another 'flex-the-muscles moment'" for Apple, Wedbush analyst Dan Ives wrote in a note to clients Sunday.
Meanwhile, Evercore analysts raised their AAPL price target to 210 from 190.
Apple stock was up nearly 2% to above 184 Monday morning, exceeding the January 2022 all-time high of 182.94. Last week, AAPL stock ran up 3.15% to 180.9. The company also is closing in on a $3 trillion market cap, ending Friday's session at $2.85 trillion.
Other Megacap Techs
MSFT was just above break-even. Shares edged up 0.75% last week to 335.40, hitting a 17-month high, not far from the November 2021 all-time high.
Google stock rose more than 1% early Monday. Last week, shares nudged 6 cents higher to 124.67. Google stock has traded tightly for the past few weeks at a 52-week high. It almost had a three-weeks-tight pattern, just missing out because one of the weekly gains was 1.51%, just exceeding the 1.5% maximum. But investors could use a move above the May 22 high of 126.43 as a place to slightly add to their position.
META stock edged higher, with Oppenheimer lifting its META price target to 350 from 285. The Facebook parent jumped 4% last week to 276.21, a fresh 52-week high.
Nvidia stock lost about 1%. Shares rose 1% last week to 393.27, but came off Tuesday's intraday all-time high of 419.38. NVDA stock, up 169% in 2023 and 96% above its 200-day, could use an extended break.
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Tesla Stock
Tesla stock advanced 2%. Shares surged 10.8% to 213.97 last week. On Friday, TSLA stock raced past a 207.89 buy point from what's either a cup or double-bottom base. The EV giant has advanced on above-average volume for five straight sessions, after few such days in the prior three months.
Tesla sold 77,695 China-made vehicles in May, including exports, according to data released Monday by the China Passenger Car Association. That's up 2.4% from April. A breakdown of local sales vs. exports will come in a few days.
Tesla now says its base Model 3 gets the full $7,500 tax credit in the U.S., along with all other Model 3 and Model Y vehicles.
Palo Alto Stock
PANW stock rose nearly 4% Monday. Shares last week just cleared a long-term consolidation.
Palo Alto Networks will join the S&P 500 before the open on June 20, replacing Dish Network.
That's part of a number of changes to the S&P indexes. Doximity, Berry Global, BWX Technologies, Planet Fitness and Crown Holdings are among those joining the S&P MidCap 400.
Artisan Partners Asset Management and CarGurus are among the new additions to the S&P SmallCap 600.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
