The stock market rose at the open, with the Nasdaq, S&P 500 and Dow Jones all solidly higher. The S&P 500 index rallied back to its 50-day moving average, rejoining the Nasdaq, at least intraday. The Dow Jones is just below that key support level.
Crude oil topped $70 a barrel as investors awaited President Donald Trump’s decision by May 12 over whether to exit the Iran nuclear deal. Starbucks (SBUX) rallied on a big Nestle (NSRGY) alliance. Top-rated chipmaker Nvidia (NVDA) cleared a buy point at the open, while Alibaba (BABA) continued Friday’s earnings rally. Nvidia customer Tesla (TSLA) said in an SEC filing that it “may raise additional capital,” but that didn’t worry investors.
The major market averages rebounded late last week, fueled by Apple’s huge rally on earnings, a company share buyback and Warren Buffett’s latest investment in the tech icon.
Stock Market Today
The Dow Jones climbed 0.7%, with Apple and Exxon Mobil (XOM) among the Dow components tilting up in early stock market trading. The S&P 500 index rose 0.6% to a sliver above its 50-day moving average. The Nasdaq composite advanced 0.8%.
Starbucks Gets Nestle Pick-Up
Nestle will pay Starbucks $7.15 billion cash upfront for the right to sell the U.S. coffee giant’s products worldwide. Citing the Nestle cash, Starbucks said it’ll speed stock buybacks, with some $20 billion devoted to repurchases and dividends through fiscal 2020. It expects the deal to boost earnings per share by 2021 at the latest.
Swiss-based Nestle aims to bolster its position as the globe’s top coffee company. The deal could help in the U.S., where the company has a relatively low market share.
Starbucks shares rose 0.2% in morning trade, well off premarket levels. Starbucks is trying to rebound, retaking its 200-day line on Friday. But the stock has gone nowhere since late 2015, while its relative strength line has been steadily declining.
U.S. shares of Nestle were not yet active.
Nvidia Eyes Breakout
Top-rated chipmaker Nvidia, whose products serve PC gaming, artificial intelligence, autonomous driving and more, is set to report earnings Thursday night. Nvidia rose 3.3% to 246.99 soon after the open, pushing Nvidia above a 239.35 buy point from a double-bottom base.
Nvidia rose 2.6% on Friday to 239.05, retaking its 50-day line. Keep in mind that Nvidia has had a long run and is in a late-stage base. Late-stage breakouts are less likely to succeed.
Microsemi (MSCC), another chipmaker, rose 3.6% to 67.96, clearing a 67.62 buy point.
Tesla May Raise ‘Additional Capital’
Tesla Chief Executive Elon Musk stressed last week that the electric car company has no plans to sell additional stock or debt this year, even though Tesla burned $1 billion in cash in the first quarter. Musk blasted “boring” analysts for making “not cool” questions about Tesla’s finances and production outlook.
Tesla was less definitive with the Securities and Exchange Commission. Tesla’s latest quarterly SEC filing released Monday said that the company “may raise additional capital to fund the rapid growth of our business.”
Companies have to lay out possibilities, even when unlikely. Tesla stock rose 1.1% as investors seemed unconcerned.
Alibaba Edges Higher
Alibaba got several analyst price target hikes Monday after the Chinese e-commerce giant delivered strong quarterly results on Friday. Alibaba’s stock shot up nearly 12% last week, including Friday’s 3.5% pop to 188.89, back above its 50-day line.
The stock climbed 2.7% to 193.94 in early trading.
Alibaba, like Nvidia, is working on a double-bottom base. It has a 201.60 entry.
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