S&P 500, Dow Jones Signal Active With Tesla, Amazon, Walmart In Focus

Stock futures were indicated lower Sunday night for the Dow Jones, S&P 500 index and Nasdaq 100. Walmart (WMT) reportedly is in talks with Humana (HUM), President Trump continued to hammer Amazon (AMZN) and make new threats to scrap the Nafta trade agreement. Tesla (TSLA) faced more negative headlines ahead of Model 3 production figures.


The stock market entered a correction last week as the S&P 500 index and Dow Jones tested their 200-day moving averages and many leading tech stocks suffered serious damage. But the major averages rebounded. The S&P 500 and Dow Jones surged more than 2% for the week while the Nasdaq composite gained 1%.

Stock Futures Mixed

Stock futures pointed to a 0.3% decline vs. fair value for the S&P 500 index. Dow Jones futures were a fraction lower. Nasdaq 100 futures fell 0.65%.

Keep in mind that extended trading often doesn’t carry over to the regular session. Stock futures did not predict last Tuesday’s sell-off. Stock futures did point to a solid open on Friday, but didn’t see the magnitude of these gains.

Walmart-Humana Talks

Walmart is talks with health insurer Humana, according to multiple reports. That could mean deepening an existing partnership or possibly a takeover.

That would follow several other big health care deals, including the pending CVS Health-Aetna takeover and the Cigna purchase of Express Scripts. Those deals reflect in part concerns over Amazon’s moves into health care.

Walmart-Humana would have some of the same logic as the CVS Health-Aetna deal. Walmart has thousands of pharmacies in its stores. A deal with Humana could direct more people to its pharmacies, boosting sales and perhaps curbing costs. Humana also has a sizable pharmacy benefit manager operation, much as pharmacy giant CVS is also a huge PBM.

Walmart stock fell 1% in late Thursday trading while Humana jumped 10%. How they react Monday may depend on whether the companies confirm or deny talks, and whether investors see a takeover as likely.

Trump Keeps Attacking Amazon

Amazon tumbled through its 50-day line Wednesday on a report that Trump wants to “go after” the e-commerce giant. The White House denied any anti-Amazon move was on the way. But on Thursday, Trump on Twitter accused Amazon of paying little in taxes and paying too-low rates to the U.S. Postal Service. Amazon initially fell further, but closed higher as the stock market rallied strongly. But Amazon held below its 50-day/10-week line.

On Saturday, Trump continued his anti-Amazon claims on Twitter. He also hammered The Washington Post, owned by Amazon CEO Jeff Bezos.


Tesla Woes Grow

Tesla confirmed Friday that Autopilot was engaged during a recent Model X crash that killed the human driver. The U.S. National Transportation Safety Board last week said it was probing the accident. Late Thursday, Tesla recalled 123,000 Model S vehicles for a possible flaw in its power steering.

Also last week, Moody’s downgraded Tesla over its heavy cash burn and Model 3 production woes.

Model 3 Production

Tesla should release first-quarter production and delivery figures for the Model 3, Model S and Model X this week. The focus will be on Model 3 output, which has repeatedly missed company targets, which have cut and pushed back several times.

The automaker, once again, raced to boost vehicle output and deliveries at the end of the quarter. Tesla encouraged Model S and Model X production workers to volunteer to help on the Model 3. But that highlights how Tesla hasn’t worked out how to ramp up production in a steady, sustainable way.

Tesla Lagging Rivals, Stock Market

The Autopilot and Model 3 woes are more glaring now because Tesla no longer has such a huge technological edge. Major automakers are rapidly introducing electric vehicles. General Motors (GM) and Alphabet (GOOGL)-unit Waymo are among those planning to roll out robotaxi services.

As for Tesla? The company put an old Roadster into space.

Tesla stock, despite a Thursday rebound, tumbled 12% for the week and 22% in March. Shares fell again Thursday night on the power steering recall.

The stock is at 52-week lows, but really has not made much progress since 2014. The relative strength line, which tracks a stock’s performance vs. the S&P 500 index, has been lagging since last June. The RS line is at its lowest levels since the start of 2017.

Even if Tesla beats low-ball Model 3 production estimates and the stock gets a nice pop, that won’t change the stock’s overall laggard trend.

Tesla CEO Elon Musk cracked April Fool’s Day jokes, tweeting that Tesla was bankrupt.


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Originally posted 2019-09-19 23:12:03.


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