This week ahead || May 29th

Jobs report, AI hype in focus after debt ceiling deal: What to know this week

As the week ahead unfolds, investors can expect a shift in focus from US debt ceiling concerns to the upcoming Federal Reserve rate announcement, with the May jobs report and corporate earnings reports, particularly from tech and retail companies like Nvidia and HP, playing a significant role. The market conversation around the US debt ceiling is expected to fade, giving more room for AI thought leaders to dominate discussions and potentially fueling the continued rally in AI-related stocks.

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Biden and McCarthy have a debt ceiling deal. Here’s what’s in it.

President Joe Biden and House Speaker Kevin McCarthy have reached a tentative agreement to raise the debt ceiling and avoid a potential US default, with the deal extending the borrowing limit for two years and removing the debt ceiling as a negotiating point until the next presidential election. The agreement includes new limits on government spending, work requirements for accessing government assistance programs, cuts in certain areas, and some changes to energy project regulations, while leaving out significant provisions on green energy tax credits, additional revenue through closing tax loopholes, and student loans.

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Ford's huge deal with Tesla: EV hits this week

Ford Motor Company has entered into a significant deal with Tesla that allows Ford-produced electric vehicles to charge at Tesla Supercharger stations in the US and Canada. Ford's EV models equipped with the Combined Charging System (CCS) port, such as the F-150 Lightning, Mustang Mach-E, and E-Transit, will gain access to Tesla's V3 Superchargers starting in spring 2024, initially requiring a Tesla-developed adapter. By 2025, Ford plans to equip its cars with Tesla's NACS charging port to eliminate the need for an adapter. Ford also revealed details about its upcoming three-row electric SUV, featuring fast charging capability, a range of 350 miles per charge, and the ability to cover 300 miles on the highway at 70 mph. In terms of emissions regulations, the California Air Resources Board is urging the Biden administration to approve a proposal that would require all new vehicles sold in the state by 2035 to be electric or plug-in electric hybrids, while a coalition of Senate Republicans and House Republicans are pushing back against stringent emissions standards. Stellantis' battery plant construction in Ontario remains paused, with disagreements between the company, LG Energy Solution, and the federal and Ontario governments. Vietnamese automaker VinFast has announced a recall of its first shipment of vehicles to the US due to a software issue, and Nikola Corp and Lordstown Motors Corp have faced delisting threats due to failing to meet minimum bid price requirements.

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This week in tech: The Nvidia-led surge

Nvidia experienced a significant surge in its stock price, nearing a $1 trillion market cap, after reporting better-than-expected first-quarter results and providing optimistic guidance for the second quarter. The company's projected revenue of around $11 billion, driven by the growing demand for artificial intelligence and chip demand in its data center business, exceeded analyst expectations. This positive news led to three Wall Street firms upgrading Nvidia's stock and raising its price target, resulting in a broad-market rally and a surge in related companies such as Monolithic Power Systems, Taiwan Semiconductor Manufacturing, and Advanced Micro Devices. In contrast, Micron Technology faced a setback as China banned the sale of its memory chips to certain industries due to a national security review. Despite this, Micron expects the impact to be minimal in the near term, and the company received financial incentives from Japan to manufacture next-gen memory chips there. Apple announced a multi-billion-dollar deal with Broadcom to purchase 5G radio frequency components, positively impacting both companies. Wall Street responded with increased price targets for Broadcom, recognizing its potential as a leading provider of custom AI computing and switching silicon. Marvell Technology saw a surge in its shares after reporting strong first-quarter results and providing optimistic revenue guidance, attributing its growth to the emergence of AI as a key driver. Analysts expressed confidence in Marvell's big data infrastructure and AI momentum, reaffirming their positive outlook on the company.

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