Morning Blast: Tesla’s Q2 Deliveries, Biden’s Plan B for Student Loans

Premarket action on Monday had the three major U.S. indexes trading mixed. The Dow Jones industrials were down 0.13%, but the S&P 500 was up 0.02% and the Nasdaq 0.15% higher.

U.S. markets will be closed Tuesday for the Independence Day holiday. Monday’s regular trading session ends early (1:00 p.m. ET). There is just one notable earnings report due out this week, on Thursday after markets close. June-quarter earnings reporting season begins in earnest a week from Thursday.

On Sunday, Tesla Inc. (NASDAQ: TSLA) reported second-quarter deliveries and production that beat estimates. The electric vehicle maker (EV) produced 479,700 new vehicles in the quarter and delivered 466,140. Production was up 8.8% sequentially and by 85.5% compared to the same quarter of last year. Deliveries rose 10.2% sequentially and 83.0% year over year. Deliveries were about 4% to 5% above Wall Street estimates.

Tesla’s stock added 34.4% in the second quarter, and the shares are up 113% for the year to date. Of 38 analysts covering the stock, 18 (47.4%) rate the stock a Hold, and just 15 have a Buy or Strong Buy rating on the shares. That leaves two Sell ratings and three Strong Sell ratings.

BYD, the Chinese EV maker backed by Warren Buffett, sold more than 700,000 units in the second quarter, comprising 352,200 all-electric models and 348,000 plug-in hybrids. The company delivered 253,046 vehicles in June, up from 239,092 in May. For the first half of 2023, BYD delivered 1.26 million vehicles, about half of which were all-electrics; Tesla delivered nearly 900,000 fully electric vehicles in the same period.

BYD sells the vast majority of its vehicles in China. Year over year, sales of all-electric vehicles rose by more than 90% in the second quarter. Tesla does not report sales by geography, but sales in China are estimated at around a third of the company’s global total. That indicates a sales increase of about 70% year over year in the quarter.

Shares of SoFi Technologies Inc. (NASDAQ: SOFI) dropped more than 4% on Friday following the U.S. Supreme Court decision striking down the Biden administration’s program to forgive a portion of Americans’ student loan debt. Before the pandemic, a significant part of SoFi’s business was refinancing student loans. That business was hurt by the moratorium on repayments. So why did the stock decline when the court has ordered repayments to begin again?

The most likely reason is that investors had read the tea leaves and were expecting the Supreme Court decision that was delivered Friday. SoFi stock had gained more than 80% in 2023 when U.S. markets closed Thursday, so while it is true that restarting student loan repayments is a positive for SoFi, a lot of the positivity was already priced into the stock. Besides, how many borrowers will want to refinance? J.P. Morgan analyst Reginald Smith told Barron’s that the basic financial impact on SoFi is “fairly insignificant” because the majority of SoFi’s borrowers would not have qualified for loan forgiveness in any event.

President Biden also apparently read the tea leaves and had a Plan B set to go. The plan has two parts: a rulemaking process that would provide an alternative path to debt relief for some borrowers and creating a new repayment plan that includes a 12-month on-ramp that would protect borrowers who may miss payments after repayments resume on October 1.

Here is a look at how U.S. markets fared on Friday.

All 11 market sectors closed higher. Technology (1.82%) and consumer cyclicals (1.37%) posted the day’s largest gains. Real estate (0.51%) and energy (0.62%) had the day’s smallest gains. The Dow closed up 0.84%, the S&P 500 up 1.23% and the Nasdaq up 1.45% on Friday.

Two-year Treasuries traded unchanged to end Friday at 4.87%, and 10-year notes slipped by four basis points to 3.81%. In Monday’s premarket, two-year notes were trading at around 4.94% and 10-year notes at about 3.85%.

This week’s economic calendar is led by the nonfarm payrolls report due out before markets open on Friday. Economists expect the total to have risen by 220,000 in June, down from an increase of 339,000 in May. The headline unemployment rate is forecast to tick down from 3.7% to 3.6%. The weekly petroleum inventory report will be released Thursday instead of Wednesday.

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