Stock Market Starts Positive, Influenced by Potential Interest Cuts
Friday marked a positive start for the stock market, influenced by predictions from Fed Governor Christopher Waller regarding potential interest rate cuts, likely to occur as early as the upcoming July meeting. Waller communicated his stance on a recent ‘Squawk Box’ session, also adding that he doesn’t foresee major inflation swings due to tariff matters. Despite his belief, he clarified that it was his personal perspective, not necessarily reflective of the collective Federal Open Market Committee’s prediction. The Federal Reserve’s Economic Projections Summary, published post the June Federal Open Market Committee meeting, showed that seven members believe that the federal funds rate would persist at its 4.25% to 4.5% range until the end of the year.
The trading atmosphere became erratic by mid-morning, provoked by a fall in several semiconductor company stocks. This downturn followed a statement in The Wall Street Journal indicating the possible revocation of permissions that allow global chip manufacturers in China to acquire American products without the need for individual licenses. A repercussion of a recent trade pause between U.S. and China that contained an agreement to avoid instigating new export measures.
Although The Wall Street Journal characterized the licensing change as an ‘action that doesn’t necessarily escalate trade,’ it may instigate a ripple effect in the ongoing sensitive negotiations between the two nations. Several chip-making giants like Taiwan Semiconductor Manufacturing (TSM) experienced a 1.9% reduction, while Nvidia (NVDA) and Marvell Technology (MRVL) saw their stocks decline by 1.1% and 1.9% respectively.
In the midst of these fluctuations, Tesla (TSLA) managed a slender 0.03% increase, leading up to the eagerly awaited launch of its robotaxi in Austin, Texas, slated for Sunday, June 22. This inaugural event, needing an invitation to participate, will exclusively highlight Tesla’s Model Y SUV.
According to Wedbush analyst Daniel Ives, ‘Sunday is the official commencement of Tesla’s autonomous golden age.’ He forecasts that the project, although commencing small-scale in Austin this season, would eventually widen its reach to an approximation of 25 U.S. cities within the upcoming year.
‘We perceive this stage of autonomy as a significant juncture in Tesla’s and Musk’s company history,’ Ives further stated. He contends that ‘Tesla’s market cap could achieve $2 trillion by 2026’s conclusion in an optimistic scenario.’ He considers this possible if the pace of its Autonomous and Full-Self-Driving (FSD) development combines with the acceleration of Cybercab and AI opportunities.
The $2 trillion market cap is twice the amount of Tesla’s current market cap, which sat at $1.04 trillion at the June 20 market close. At present, only five U.S. companies surpass the $2 trillion mark: Microsoft (MSFT), Nvidia, Apple (AAPL), Amazon (AMZN), and Alphabet (GOOGL).
In other news, Circle Internet Group (CRCL)’s stock experienced a 20.4% surge, subsequent to their stablecoin platform obtaining its initial Buy rating. Seaport Research Partners analyst Jeff Cantwell spearheaded coverage on this cryptocurrency stock and proposed a $235 price target, slightly lower than CRCL’s closing price of $240.28 on June 20.
Circle has seen an upward trend since its June 5 IPO, with shares soaring nearly 190% from the closure price of the IPO day. The upward trend is partially attributed to the Senate passing the GENIUS Act recently. This legislation pledges to develop a regulatory outline for stablecoins and encourage market growth for the cryptocurrency.
Cantwell envisages the long-term ‘market cap’ of stablecoins reaching $2 trillion, a substantial jump from the current estimate of around $250 billion. ‘We predict Circle to achieve annual revenue growth between 25%-30%… with the capacity to generate operational leverage as it continues to expand,’ he added.
Regarding the major indexes, the Dow Jones Industrial Average ended up slightly, by 0.08% at 42,206. However, the S&P 500 reflected a slight drop of 0.2% to reach 5,967. Moreover, the Nasdaq Composite recorded a slid of 0.5% at 19,447.