index jump; Software stock skyrockets on buyout

The Dow Jones rose sharply on Friday morning, as did the S&P 500 and the Nasdaq. Crude oil futures and Treasury yields edged higher after falling in recent days on recession fears.




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Zen office (ZEN) soared after agreeing to a buyout, but was far from pre-market highs. Meanwhile, Merck (MRK) is getting closer to a takeover of seagen (SGEN).

fedex (FDX) rose on bullish earnings forecasts, despite a slight lack of views for the fiscal fourth quarter. FDX stock jumped 9%, breaking above its 200-day line.

US-listed Chinese stocks continued to perform well, with Li-Auto (LI), Xpeng (XPEV) and Nio (NIO) running higher. Electric vehicle giant BYD (BYDDF) is on the verge of a breakout. Meanwhile, Ali Baba (BABA) and Pinduo-duo (PDD) were surging amid growing optimism about the Chinese economy after the painful Covid lockdowns.

You’re here (TSLA) rose slightly as its Shanghai plant prepares to close in order to significantly increase production capacity. The EV maker has also reintroduced an improved Autopilot offering.

Dow Jones today

The Dow Jones rose 2%. The S&P 500 jumped 2.3% and the Nasdaq 2.6%.

The 10-year Treasury yield rose slightly to 3.08% from 3.07% after falling 24 basis points on Wednesday and Thursday.

Crude oil prices rose 2%. Oil is heading for its first monthly decline since November.

Copper prices fell 1%, however, after plunging more than 5% on Thursday to a new 16-month low. This is a sign of a possible peak in inflation but also of a slowdown in economic growth.

New home sales jumped to an annual rate of 696,000 in May from the upwardly revised 629,000 in April. Analysts had expected a decline to 587,000.


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Thursday stock market rally

The Dow Jones Industrial Average rose 0.6% in trading Thursday. The S&P 500 index climbed 0.95%.

The Nasdaq composite jumped 1.6%, a strong lead on Day 4 of its attempted rally. But Nasdaq volume was slightly lower than the previous session, according to IBD data. So there was no follow-up day to confirm the new rally attempt.

Even with this week’s gains, the Nasdaq has only managed to break above its 10-day moving average, while the S&P 500 and Dow Jones are just at that level. All are below their 21-day moving averages as well as their 50-day lines.


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Redemption buzz

Zendesk stock jumped on Friday after the enterprise software maker agreed to a $10.2 billion, $77.50 share buyback by private equity firms Hellman & Friedman and Permira.

Shares jumped 28% to above 74. But ZEN stock had climbed more than 50% earlier during the takeover buzz.

Zendesk shares were trading near a two-year low.

Meanwhile, Merck is stepping up talks to buy Seagen biotechnology, the WSJ reported. SGEN shares rose 2%, after surging last week on reports of talks. Seagen ended Thursday with a valuation of $32 billion.

Merck increased by a fraction.


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Chinese stocks

Li Auto’s stock continued its mighty run over an upcoming new model and expectations of extended subsidies for electric vehicles in China. LI stock jumped almost 4%. On Thursday, Li Auto stock jumped 6.6% to 39.24 on Thursday, surpassing the buy point of 37.55 after a long and very deep consolidation. But LI stock closed slightly from the buy point and 54% above its 50-day moving average.

Xpeng stock rose 5% and Nio stock 3%, both approaching their 200-day moving averages.

BYD stock rose slightly, just below a buy point of 39.81 from a tumbler base with a 48%-deep handle, according to MarketSmith analysis.

Meanwhile, Alibaba’s stock rose 3%, closing in on its 200-day long slippery line. Pinduoduo’s stock rose slightly, already above its 200-day mark.


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Tesla Stock

Tesla stock rose 4%, returning above its 21-day line. It remains immersed in a long and messy consolidation.

Tesla reportedly shut down Model Y production at its Shanghai factory for two weeks in early July, Bloomberg reported. It will then close its Model 3 line for 20 days starting July 18. After expanding factory capacity, Tesla Shanghai’s Model Y production capacity will increase from about 11,000 to 14,000 per week. Model 3 capacity will jump to 7,700 per week from 5,500.

Meanwhile, Tesla is reintroducing an improved Autopilot offering for $6,000. Its specs fall between those of the standard Autopilot and those of the $12,000 Full Self-Driving.

Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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