Stocks on Wall Street rallied on Friday, with the benchmark S&P 500 scoring its biggest one-day gain—hitting 3,911.74, up 116.01 points, or 3.06%—since May 2020 as investors pared back bets on aggressive Federal Reserve rate hikes amid signs of slowing economic growth.
Not to be left out, both the Dow, which was up 823.32 points, reaching 31,500.68—a 2.68% gain—and the NASDAQ joined in the rally. The NASDAQ Composite finished the Friday session with a 375.43 point lift, rising 3.34% to reach 11,607.62.
According to the Investing.com Fed Rate Monitor Tool, Fed funds futures traders are now pricing for the benchmark rate to increase to about 3.5% by the end of 2022, down from previous expectations that it would rise to around 4%.
The coming week is expected to be another eventful one as markets continue to weigh the Fed’s monetary tightening plans for the second half of the year.
On the economic calendar, most important could be Thursday’s personal consumption expenditures data, which includes the personal consumption expenditure (PCE) price index, the Fed’s preferred inflation measure.
Meanwhile, on the earnings docket, there are just a handful of corporate results due, including Nike (NYSE:NKE), Micron (NASDAQ:MU), Walgreens Boots Alliance (NASDAQ:WBA), General Mills (NYSE:GIS), Constellation Brands (NYSE:STZ), and Bed Bath & Beyond (NASDAQ:BBBY).
Regardless of which direction the market goes, below we highlight one stock likely to be in demand and another which could see further downside.
Remember though, our time frame is just for the upcoming week.
Stock To Buy: Tesla
Fresh off the heels of one of its biggest weekly gains of 2022, Tesla (NASDAQ:TSLA) shares look set to continue higher in the coming days as the electric vehicle maker prepares to report second quarter sales figures.
While the Elon Musk-led company usually reveals the all-important delivery numbers on the second day of a quarter—regardless of weekends—it is possible they could arrive on Friday morning due to the U.S. Independence Day holiday on Monday, July 4.
Analysts expect Tesla to have delivered 273,000 vehicles in the second quarter, down 12% from the preceding quarter, as COVID-related shutdowns in China hampered production at its Shanghai factory.
The EV pioneer company shipped roughly 310,000 vehicles in Q1, its highest quarterly total on record, despite grappling with supply chain issues and a global chip shortage.
In addition, chart technicals look promising as they suggest that Tesla stock looks ready to break out of its recent trading range after recapturing key levels.
TSLA shares, which managed to successfully hold above their May lows amid the recent selloff, are now back above the 10-day and 21-day moving averages, which usually signals more gains ahead in the near term.
TSLA surged 13.3% last week to end Friday’s session at $737.12. At current levels, Tesla has a market cap of $763.9 billion, making it the world’s most valuable automaker, bigger than names such as Toyota Motor (NYSE:TM), Volkswagen (OTC:VLKAF), Daimler (OTC:DDAIF), General Motors (NYSE:GM), Ford Motor (NYSE:F), and Honda Motor (NYSE:HMC).
Despite last week’s gains, Tesla shares are off by 30% year-to-date and are roughly 41% below their all-time high of $1,243.49 touched on Nov. 4.
Stock To Sell: Exxon Mobil
After recommending Exxon Mobil's (NYSE:XOM) stock multiple times in the past several months, shares of the U.S. oil-and-gas giant are likely to suffer a challenging week as investors flee the energy space amid growing recession fears.
Crude futures suffered their first back-to-back weekly decline since April, with U.S. WTI prices briefly falling to a six-week low near $101 a barrel on concern that rising interest rates could tip the global economy into recession.
WTI oil, which was trading above $120 just two weeks ago, staged a modest rebound to close the week at $107/bbl.
With just a few days left to go until the end of June, oil futures are on track to post their first monthly loss since November as U.S. President Joe Biden boosts his effort to lower prices and as the Federal Reserve’s rate hike plans threaten to slow down the economy.
After hitting an all-time high of $105.57 on June 8, XOM stock tumbled rapidly to a low of $83.52 on June 23, its weakest level since May 12. Despite recovering mildly on Friday, Exxon Mobil shares ended the week at $86.90—approximately 18% below its recent record peak.
At current levels, the Irving, Texas-based energy behemoth has a market cap of roughly $366.1 billion, making it one of the world’s largest oil-and-gas companies.
Even with its recent selloff, Exxon shares have soared 42% year-to-date to easily outpace the broader market.
Biden previously called out the U.S. oil industry, and Exxon specifically, for exploiting the current supply shortage to boost profits, saying it has “made more money than God” this year.
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