US Close: Stocks rally, Jobless claims decline, EV pledge delivered, Robinhood volatility

US stocks are hovering near record highs as the reopening trade returns as US vaccinations continue to improve and following solid weekly jobless claims data.  Wall Street is becoming aggressively bullish here and it is hard to argue against that given the current low interest rate environment and since the economy might not be beyond peak growth just yet.  Goldman Sachs is the latest to upgrade their outlook for the S&P 500, now calling for an additional 7% gain from current levels.  With infrastructure spending right around the corner and no interest rate hikes until the end of next year at the earliest, this market seems content in thinking a taper tantrum will be avoided. 

US Data

Weekly jobless claims are trending in the right direction and when you add strong improvements with the employment components in both the ISM’s manufacturing and service reports, expectations are surging that tomorrow’s nonfarm payroll report will be robust.  The labor market recovery is still some ways away from reaching substantial progress toward the maximum employment goal, but a million-plus payroll report might be enough to convince the Fed to move forward with tapering at Jackson Hole. 

Initial unemployment claims declined to 385,000, a tad above the consensus estimate, but still an improvement from the downwardly revised 399,000 prior reading. Continuing claims delivered a strong beat at 2.93 million, better than the consensus estimate of 3.255 million. 

Trade data showed the US deficit widened to a fresh record at $75.7 billion. 

EV

The environmentally focused Biden administration is fulfilling its campaign promise of delivering an EV era. The Biden administration will sign an executive order that will make half of all new vehicles sold be zero-emission vehicles in 2030.  All the major automakers rallied but if the new guidelines aimed at 2026 are too aggressive that may weigh on some manufacturers.  Electric vehicles for the masses should excite Tesla, NIO, XPeng, and Lucid Motor shareholders. 

Robinhood

Robinhood shares are lower after filling to sell 97.9 million shares over time.  The trigger for this offering was reportedly in the IPO prospectus, so some traders were not surprised.

The Cboe Global Markets noted that over 300,000 option contracts traded yesterday, confirming this was not a short squeeze, but retail taking advantage of the start of option trading for Robinhood. 

Robinhood volatility is not going away anytime soon, but hesitancy from short-sellers due to past failed meme stock trades, may keep this trade alive a little while longer. 

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