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Crypto legislation back on track, Bitcoin hitting highs (0:20). Financial earnings holding ground (2:00). JNJ beats expectations, absorbing tariff hits (3:25). Tesla report coming next week; news priced in (4:15). Consumer earnings coming, (5:50). Joby Aviation back on investors’ radar (9:15).
Transcript
Rena Sherbill: Welcome back to another week of Wall Street Roundup. Thanks for joining us, Brian.
Brian Stewart: Great to be here as usual.
RS: So lead us into the weekend. Talk to us about what we’ve seen this week.What’s been top of mind for you?
BS: This week, there’s been a lot of wrangling in Washington. There were some hurdles with the crypto regulation legislation that’s been making its way through Congress, but that seems back on track now.
You see Bitcoin (BTC-USD) has been higher lately though. It’s had trouble getting above the $120,000 mark. So I would keep that in mind as a spot.
But if you look at the shovels and pick axe level of Bitcoin related stocks, you see Coinbase (COIN) is up 5% in the last five days. It’s setting a new fifty two week high. It’s up 67% year to date.
Meanwhile, Circle (CRCL) is up 23% over the past five days. So this is during the period of time when the politicians were ironing out the legislation, Circle’s off its post IPO highs, which it reached in June. But like I said, still up strongly during the week.
So I think you see some upside in the overall crypto space just as there gets to be some clarity about the regulatory environment.
After Trump was elected, there was a spike in Bitcoin and crypto stocks, with the belief that there would be a supportive regulatory environment, and you’re starting to see that actually come to pass. I think you’re just fulfilling some of the promise that was made a few months ago going into this administration.
RS: And earning season is well underway. Yesterday, you were talking about the airlines. What would you say from the financial sector?
BS: Financials were the main theme of earnings this week. We’re still ramping up in terms of earning season, so there’s not a lot of huge names outside of financials.
It was a relatively unimpressed market. It was basically a shrug following the financial earnings. So you see most of the major players up or down in a range of plus or minus 2% following their results.
One standout is Citi (C), which is up about 5% in the the last five days, but overall, a flat performance. If you look at the (XLF), which is the sector ETF for financials, it’s basically flat over the last five days.
So the market took those earnings in stride. They’re in line with what people expected. And you have to remember that financials were up going into it. So names like Citi were up 29% year to date. Goldman Sachs (GS) was up 24%. The overall XLF was up 8% year to date.
I think that as a kickoff to the earning season, I would take that as a win that the already strong performing financial sector held its ground after its earnings. So that part of it seems like it’s well within expectations.
Otherwise, you saw J&J (JNJ) rose about 6% after its earnings. At one point, it hit the biggest intraday gain in nearly two years. Following that, it beat expectations, on both earnings and revenue, raised its forecasts. It cited forks tailwinds and strong operational performances for its earnings.
So far, it’s been able to absorb the tariff hit. Obviously, that’s something to keep an eye on for big multinational companies like JNJ, whether or not the tariffs that are currently coming online are going to have an impact.
So far so good on that front, at least using JNJ as a a bellwether for that, but I think we’ll see as the earning season heats up how concerned companies are about that.
RS: Anything else to add to the earnings conversation or what investors could look for next week?
BS: So next week, the big name is going to be Tesla (TSLA). As always, it’s going to be a tension between results and the future prospects.
Investors are already aware that the company has taken a hit recently, both the brand hit that it took with Elon Musk, DOGE, and then the feud with Trump, the whole drama there obviously put Tesla in the spotlight in a way that wasn’t exactly beneficial to its brands.
That news is largely priced into the stock. At this point I think investors, like a bullish investor, would be betting that it bottomed out in Q1 and Q2 is gonna show signs of recovery there. So I think avoiding a disaster on that front would be step one for a Tesla bull.
And then I think a lot of the discussion around the stock is going to focus on its more innovative products. Humanoid robots, robotaxis, things like that. Look out for commentary for that. In a lot of ways, that’s where Musk excels as a businessman is the showmanship aspect of it.
The earnings conference call and the presentation there is probably gonna give him a chance to reset expectations and kind of get back into consciousness, at least on Wall Street, as a businessman and less as a political player.
RS: Anything else to add to the conversation to look forward to for next week, either macro or other stock specific news happening?
BS: Yeah. Just to look at a few themes that’ll likely come up. There’s some consumer players that are set to report earnings. Coca Cola (KO) is coming out, Southwest (LUV), is coming out in the airline space.
You have AutoNation (AN), an auto dealer. That might be an interesting look at whether or not consumers are putting off purchases of large items due to the current pricing environments.
Meanwhile, on Friday, you have (HCA), which is a hospital operator coming out with the commentary coming out of the big beautiful bill about the situation for hospitals, rural hospitals specifically, but hospitals in general. I think that earnings call will be interesting in that industry just to see where industry leaders are looking for the future in the new regulatory and federal spending environment.
RS: Coke (KO) was in the news this week, hit some headlines with the president. Anything to note there?
BS: The environment we’re in, there’s such an overlap between Washington and Wall Street. I think that’s gonna be inevitable from here on out is there’s gonna be feuds that spark up.
Disney (DIS) was the kind of political target for a while. I don’t think we’ve seen the last of of that either. I think investors are getting used to that as part of the noise surrounding stock trading now is just where do certain big name brands stand in regard to the administration.
RS: And there’s always been, right, that sort of tension at times between Wall Street and Washington. Do you feel like it’s the most pronounced now or do you feel it’s just the most nakedly displayed, let’s say?
BS: I think the tone is different because you can think back to during the Obama administration, during the Bailout era, there was a huge overlap between Washington and Wall Street. It was more directly financial related. It was also in the wake of a major crisis, so it was predictable that the government will get involved.
Also thinking back to the Clinton administration, there was a lot of talk about antitrust in Microsoft (MSFT) and breaking up the company, perhaps things like that.
It’s not certainly unheard of that there would be tension or disputes that rise up among large companies and the federal government, but the tone does seem to have changed. It’s more personal now than it was. It’s less regulatory and more political in nature.
So again, I feel like since the first round of tariff stock movements, in the April time frame when the market crashed on the fear that the tariffs were gonna come to effect and then the bounce back that happened when those were delayed, even now when those headlines are coming out, you don’t see the huge swings now that you saw back then.
I feel like investors are becoming immune to it in a certain way. They’re sort of building it into their mental models on how to invest, that this is just the tone at which these discussions are going to continue for at least the next few years.
RS: Bob and adapt. Anything else, Brian?
BS: One company that I just thought was worth noting because it’s kinda interesting. Joby (JOBY). It makes electronic air taxis. It’s up about 39% in the past week. It is set to double its production in its California facility. It’s going to be able to make up to 24 air taxis.
This is a company that came public a few years ago in 2021 through a SPAC. It got a lot of initial excitement and then fell off dramatically when it became clear that it wasn’t gonna meet ambitious timelines that it set forth.
Their goal is to have an air taxi service. The flagship that they’ve been talking about for a while is from lower Manhattan to JFK where they can fly you there in I think seven minutes or something like that was the time frame given.
That hasn’t materialized yet, but the recent moves that the company’s made upgrading its facilities, there’s also been some regulatory easing. They’re looking to launch their first service in Dubai. So there’s signs that the company is materializing some of the promise they had and so it’s been up dramatically lately.
So just as a check-in from a company that was hot a while ago and kind of fell off the radar, I think it’s interesting to note that it’s back on the radar.
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