Tesla lifts markets

General market commentary

Monday's market session showcased contrasting performances among mega-cap equities, with strength in Tesla driving broader gains even as Nvidia struggled. The day began with some volatility as the 10-year Treasury note yield briefly touched 4.5%, but a slight retreat in yields allowed equities to rebound, with advancing shares outpacing decliners by a two-to-one margin. Heavier-than-normal trading volumes and optimism around a potential federal framework for self-driving cars buoyed Tesla’s performance. Nvidia, however, faced headwinds from concerns over overheating issues in its new Blackwell graphics processing units ahead of its Wednesday earnings release, though management downplayed the challenges as routine.

The broader market displayed signs of recovery, with all 11 S&P 500 sectors closing above Friday's levels, suggesting widespread buying interest possibly fuelled by a "buy the dip" mentality. Gains were led by energy shares, which rose 1.2% on the back of a 3% increase in crude oil prices amid heightened geopolitical tensions in Ukraine. The Nasdaq Composite (up 0.6%) outpaced other indices, while the Dow Jones Industrial Average was the sole major index to decline, weighed down by equities such as Nike and Goldman Sachs. Despite lingering caution after the Federal Reserve's recent hawkish tone, the market showed resilience, with this week’s retail earnings and housing data likely providing further direction.

Latest market update

US equity futures were little changed on Tuesday as investors awaited key earnings reports, including those from Nvidia and major retailers. The market sentiment was supported by optimism around potential rate cuts and expectations of a more business-friendly administration.

Asian equities rose on Tuesday, led by tech gains tracking U.S. strength, while Australia’s ASX 200 outperformed with a 1.1% rise in mining and energy shares. Japan gained ahead of inflation data, but Chinese indices lagged amid cautious sentiment over weak stimulus and economic challenges.

The Nasdaq and S&P 500 closed higher on Monday, with the former rising 0.6% and the latter gaining 0.4%, as investors looked ahead to Nvidia’s earnings and Tesla surged 5.6% on potential policy changes under the incoming Trump administration. Energy shares led gains, while the Dow Jones fell slightly by 0.1%.

European markets closed lower on Monday, with the Stoxx 50 falling 0.2% amid mixed sector performance. Shares of Novo Nordisk, ASML Holding, and Hermes International saw declines, while SAP, Nestle, and LVMH posted modest gains, as investors awaited key economic data and central bank insights.

US Treasury yields showed slight movement on Monday, with the 10-year Treasury note yield easing by one basis point to 4.41%.

The dollar held steady around 106.2 on Tuesday after recent profit-taking, but weakened against the euro as comments from ECB officials raised concerns over the impact of potential US trade tariffs on eurozone growth. Despite this, the dollar remains up by about 6% since September, driven by expectations of fewer rate cuts from the Federal Reserve.

Oil prices edged lower in early Asian trade on Tuesday, following sharp gains the previous day due to disruptions in Norwegian production and escalating Russia-Ukraine tensions. However, concerns over slowing demand, particularly from China, and fears of a supply glut limited further price increases.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Super Micro shares jumped 16% during regular trading and nearly 40% after-hours after appointing BDO USA as its auditor and submitting a plan to regain Nasdaq compliance. The company has also seen inflows from some large investors recently.

Alphabet faces potential antitrust action from the U.S. Department of Justice, which may seek to force the sale of its Chrome browser and impose restrictions on its AI and Android operations, according to Bloomberg.

Enel's updated 2025-2027 guidance shows cautious optimism, with EBITDA growth projected at 8.2% and a higher dividend per share floor, while focusing on regulated grids and renewables. Analysts at Jefferies raised their price target by 12% to €9.00, citing strong growth potential despite risks from regulatory uncertainty and power price fluctuations.

Dell Technologies saw its price target raised by Mizuho analysts, who highlighted the company's increasing share in the AI server market, driven by demand for NVIDIA's GPUs. The analysts project strong growth in AI server spending, positioning Dell to benefit, particularly from Tier 2 CSPs and major customers like Apple.

Robinhood's shares surged by more than 8% on Monday after Needham upgraded the equity to "buy," citing its potential to benefit from a more crypto-friendly SEC leadership and recent expansion in cryptocurrency offerings. The analysts set a price target of $40, highlighting the company's growth prospects and improved EBITDA margins.

Oppenheimer analysts believe the current bull market will extend into 2025, with a market top 6-12 months away, driven by continued gains in high-momentum shares. They advise focusing on high-momentum equities while avoiding lagging ones as the market progresses towards its peak.

Upcoming data and events

Today, investors are awaiting key earnings reports from major retailers, including Walmart and Lowe's, as well as housing data such as October housing starts and building permits. Additionally, the latest GDP update from the Atlanta Fed’s GDPNow indicator and October's leading indicators are expected later in the day.

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