US equity indexes are declining on Tuesday as investors are continuing to dump technology stocks after the long Labor Day holiday weekend and after Friday’s news that SoftBank made large option purchases. The tech-heavy Nasdaq Composite Index is plunging 2.6%, while the Dow Jones Industrial Average is down 1.2% led by top decliners Apple and Microsoft. The S&P 500 Index is sliding 1.5%.
In the spotlight yet again, Tesla (TSLA) is diving another 17% to a three-week low after the electric car maker was not added to the S&P 500 following the rebalancing of the S&P Dow Jones Indices.
“In a nutshell Tesla not getting into the S&P 500 will be a head scratcher to the bulls that viewed this as virtually a lock given all the parameters met,” wrote Wedbush analyst Daniel Ives in a note to investors. With shares still up a stellar 317% year-to-date, Ives has a Hold rating on the stock with a $380 price target.
As part of the reshuffle, Etsy, Teradyne and Catalent were added to the S&P 500, while H&R Block, Coty and Kohl’s left the US stock-market benchmark index.
In other Tesla news, Volkswagen AG CEO Herbert Diess has clarified that the German automaker is not working on a cooperation with rival Tesla. Tesla’s CEO Elon Musk went on a three-day visit to Germany last week, and met up with Volkswagen’s Diess to test-drive the German competitor’s first electric car in its ID series.
In aerospace news, Boeing is having another bad day as a Wall Street Journal report that the US Federal Aviation Administration (FAA) is investigating manufacturing flaws in the 787 Dreamliner jets is pushing the stock down 4.2%. The flaws are “potentially stretching back almost a decade”, according to an internal government memo and people familiar with the matter.
On the run, General Motors shares are surging almost 10%, while Nikola Corp. is soaring 46% after the two companies announced a partnership to build electric pickup trucks. As part of the partnership GM will get a 11% stake in Nikola valued at about $2 billion. In exchange for the Nikola shares, GM will provide Nikola with batteries, fuel cell systems and a factory to build its Nikola Badger pickup.
Peloton Interactive is popping 12% after the exercise equipment company announced plans to sell the original Peloton Bike at the lower price point of $1,895, the Peloton Bike+ at $2,495, the original Peloton Tread at $4,295 and the lower-priced Peloton Tread at $2,495.
Walt Disney is gaining almost 3% after Deutsche Bank upgraded the stock to Buy from Hold and raised the price target to $163 from $128, saying that the company has “the most clear path to successfully transitioning its general entertainment programming and content production businesses into a globally scaled, vertically integrated streaming entertainment leader”.
In M&A news, Mylan has entered into an agreement to buy the rights to Aspen Pharmacare’s thrombosis business in Europe for EUR 641.9 million ($756.8 million). Under the terms of the agreement, the US pharma company will acquire the intellectual property and commercialization rights of Aspen’s thrombosis business in Europe.
Corona: UK health secretary Matt Hancock said that AstraZeneca’s COVID-19 vaccine would “most likely” be available in the first few months of 2021.
“We have got 30 million doses already contracted with AstraZeneca (AZN), in fact they are starting to manufacture those doses already, ahead of approval, so that should approval come through – and it’s still not certain but it is looking up – should that approval come through, then we are ready to roll out,” Hancock told British national news radio station LBC. “The best-case scenario is that it happens this year. I think more likely in the early part of next year – in the first few months of next year is the most likely.”
