SpaceX Helps Prevent Pullback With New Price Target
The aerospace firm was among the few AI-related names that carried the day.
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With oil higher and bonds lower, buyers showed little interest in equities on Tuesday. The DJIA was the biggest loser, down about 1%. This was mainly due to Amgen (AMGN), which fell about 10%. The S&P 500 was down 0.5%, with overall breadth meandering under 40% positive for most of the day, with more new lows than new highs.
Intel (INTC), Tesla (TSLA), SpaceX (SPCX) and a few other AI-related names prevented a deeper pullback and kept the Nasdaq 100 (QQQ) close to flat. Small caps had minor losses but there was a fair number of stocks with moves of 10% or more, which tells you the speculative interest has not disappeared entirely.
AI Chatter Was About Financing
There was some positive talk around AI on Tuesday, but it was company-specific rather than a major theme. Intel (INTC) rose on a $20 billion equity raise at $95 a share, with another $15 billion deal planned. A stock rising on dilution that size is unusual, but it happened because the money is for a deal that is already in place with Nvidia (NVDA), which has a stake around $30 billion. Bank of America called the raise a net positive and kept its buy rating.
SpaceX gained about 4% after Pivotal Research initiated coverage with a $220 target, and the space names moved together with it. The company has another lockup expiry on Wednesday, so that strength is about to meet a supply event. So far, SpaceX has done a good job of absorbing supply and the chart is favorable.
Capital raises and analyst initiations are short-term Wall Street catalysts and not significant new demand. They can hold a few large names up for a session. They do not attract big money buyers back to the rest of the market.
Nothing to Entice Buyers Until Friday
The problem the market faces is that there is not much news flow between now and CPI on Friday, and what news there is, is pushing the wrong way. Oil rose again and bonds fell, which is the combination that has been hitting equities all month. The news out of Iran suggests the conflict is going to drag on rather than be resolved, and every day it drags on is another day the oil premium stays in the inflation numbers.
PPI arrives Thursday and CPI Friday. Those decide the outcome of the Fed September meeting, and until they hit there is no reason for anyone to add exposure into a market that has been selling good news.
Game Plan
A session like this one is what the transition I discussed on Tuesday morning looks like from the inside. A handful of large names hold the indices while the average stock drifts lower, and the money that leaves does not find a home in another group. I did not add anything on Tuesday and I did not need to sell anything either. The positions I have are sized for this lackluster environment.
What I am doing is watching the 10% movers list, because that is where the next set of opportunities will show up first. A market with poor breadth and a shrinking list of big movers is not favorable for shopping. Tuesday’s list of 10% movers was decent for a day this dull. If it holds up through the inflation data, that will be enticing.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
