The stock market ended higher on Friday, sending the and to record closing highs as trade deal hopes fueled investor risk appetite and economic data helped solidify expectations for rate cuts from the Federal Reserve.
Source: Investing.com
All three major U.S. stock indexes posted strong gains for the week. The benchmark S&P 500 rallied 3.4%, the tech-heavy Nasdaq jumped 4.3%, while the 30-stock advanced 3.8%.
The holiday-shortened week ahead is expected to be an eventful one as investors assess the outlook for the economy, inflation, interest rates and corporate earnings amid President Trump’s trade war.
U.S. stock markets will close early at 1:00PM ET on Thursday and remain shut on Friday for the Fourth of July Independence Day holiday
Most important on the calendar will be Thursday’s U.S. employment report for June, which is forecast to show the economy added 120,000 positions. The unemployment rate is seen rising to 4.3%.
Source: Investing.com
That will be accompanied by a heavy slate of Fed speakers, including Chairman Jerome Powell. Traders have priced in a that the Fed will implement its first rate cut of the year in September, with a smaller, 20% probability of a rate cut coming as soon as July.
And while the earnings season is all but over, a few notable companies will report in the coming week, including Constellation Brands (NYSE:) and Progress Software (NASDAQ:).
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is justfor the week ahead, Monday, June 30 – Friday, July 4.
Stock to Buy: Tesla
Tesla (NASDAQ:) is set to announce its global second-quarter vehicle delivery and production data on Wednesday morning, and the setup looks favorable for a positive surprise.
TSLA closed Friday’s session at $323.63, just above its 50-day ($311.29) and 200-day ($312.82) moving averages. With the stock having consolidated in recent weeks, a delivery beat could reignite momentum and push shares higher.
Source: Investing.com
While the official consensus calls for deliveries of approximately 390,000 vehicles, recent analyst forecasts have been more conservative, ranging between 350,000-370,000 units.
This divergence creates an opportunity. The consensus figure of 390,000 would represent a 12% year-over-year decline but a significant 16% sequential improvement from Q1’s 336,681 deliveries. Given that many analysts have lowered their expectations below this consensus, Tesla has a reasonable chance of beating the whisper numbers.
Tesla produces the Model 3, the Model Y, Model X and Model S, as well as the Semi and Cybertruck. The Model Y crossover accounts for the majority of sales. The Austin, Texas-based company is widely recognized as the global leader in the electric vehicle market, holding a dominant market share in the U.S. and China.
Investors will also get insight into Q2 production figures, which are anticipated to once again significantly outpace demand, highlighting Tesla’s ongoing capacity to scale. Additionally, the release of battery storage deployment figures could provide further upside if they reflect growth in the energy segment.
Source: InvestingPro
It is worth mentioning that Tesla’s financial health stands out as assessed by InvestingPro’s AI-backed models, with an overall InvestingPro score of 2.50 (“GOOD”), powered by strong profitability (3.12), robust cash flow (3.41), and solid price momentum (2.88).
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Stock to Sell: Constellation Brands
On the flip side, Constellation Brands faces a tough week as it gears up to report its first-quarter earnings for the May-ended period on Tuesday after market close, and the outlook appears challenging.
The beer, wine, and spirits giant is grappling with a tough macroeconomic environment, growth stagnation, and tariff-related headwinds, particularly in its wine and spirits segment, which is experiencing double-digit revenue declines.
As could be expected, an InvestingPro survey of analyst earnings revisions reveals growing pessimism ahead of the print, with 12 of the 14 analysts covering STZ revising their EPS estimates downward in the past 90 days. Traders are bracing for post-earnings volatility, with options markets pricing in a +/-6% move in either direction.
Source: InvestingPro
Constellation Brands is seen earning an adjusted $3.41 per share, declining 4.5% from EPS of $3.57 in the year-ago period. Meanwhile, revenue is forecast to inch down 3.8% year-over-year to $2.56 billion, reflecting ongoing challenges across its portfolio.
While the beer segment remains the company’s primary revenue driver, it is also facing a slowdown as younger consumers shift toward alternatives like ready-to-drink cocktails and hard seltzers.
Analysts expect weak guidance for the coming quarters, with little to no growth in revenue or profitability. The company’s inability to adapt to changing consumer trends and its reliance on stagnant segments make it a risky bet in the current environment.
Source: Investing.com
STZ stock ended Friday’s session at $161.33, its second lowest closing price since May 2020. Shares are down 27% in the year-to-date. Moving averages reinforce the bearish case, with only the very shortest timeframes offering any support.
It should be noted that Constellation Brands trails with an overall InvestingPro health score of 2.25 (“FAIR”), showing weak marks for cash flow and growth.
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Disclosure: At the time of writing, I am long on the S&P 500, and the via the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), and Invesco S&P 500 Equal Weight ETF (RSP).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
