📈 Rivian Charges Back

Microsoft to invest $80B on AI data centers, CES set to kickoff with a focus on AI, Paychex to buy rival Paycor, United brings Starlink to flights this spring, Rivian scores a production win

Author

Evelio Silvera
January 06, 2025

Today’s Bull Street Market Briefing is Sponsored by:

Good morning.

⚡ The Fast Five → Microsoft to invest $80B on AI data centers, CES set to kickoff with a focus on AI, Paychex to buy rival Paycor, United brings Starlink to flights this spring, Rivian scores a production win

🔎 Market Trends → Wall St Week Ahead US jobs report poses first big stocks test of 2025; US Futures Rise to Begin the Year

And now…

⏱️ Your 5-minute briefing for Monday, January 6, 2024:

MARKET BRIEF
Before the Open

As of market close 01/03/2024.

Pre-Market

  • Tesla was among the best performers on the S&P 500 and the Nasdaq, up 8.2%.

  • United States Steel's shares slumped 6.5%.

Fear & Greed

 

Markets in Review

Tech Powers Market Gains as Optimism Builds

The Nasdaq surged 1.8% to 19,621.7, the S&P 500 rose 1.3% to 5,942.5, and the Dow gained 0.8% to 42,732.1. Consumer discretionary led all sectors, while materials were flat. No sector posted a loss.

The Big Picture:

Stocks rallied Friday as investors digested improving manufacturing data and positive remarks from a Federal Reserve official. The ISM manufacturing report showed contraction easing in December, hinting at growing demand and cautious optimism in the industrial sector.

Fed official Tom Barkin echoed a constructive outlook for 2025, highlighting strong consumer spending as a buffer against risks tied to inflation and geopolitics. Yields edged higher, with the 10-year Treasury at 4.60%, reflecting the market's cautious optimism.

Oil climbed 1.2% to $74.03/barrel, buoyed by supply stability. Gold dipped 0.7% to $2,650.70/oz, while silver rose 0.7% to $30.1/oz, signaling mixed sentiment in safe-haven assets.

Market Movers:

  • Nvidia (NVDA): Rose +4.5%, the Dow's top gainer, as anticipation builds for CES announcements and updates on AI sales momentum.

  • Tesla (TSLA): Jumped +8.2%, fueled by record sales in China and a price target upgrade from Evercore ISI, reflecting strong EV demand.

  • Adobe (ADBE): Fell -2.4%, the Nasdaq’s biggest laggard, after a price target cut by UBS.

  • United States Steel (X): Dropped -6.5% after the Biden administration blocked its acquisition by Nippon Steel over national security concerns.

What They’re Saying:

"The year starts on a solid footing for consumer-driven growth and tech innovation, but markets remain sensitive to inflation and geopolitical risks," said BMO Capital Markets in a note.

WHAT WE’RE WATCHING
Events

  • There are no events scheduled for today.

Earnings Reports

  • Today: Commercial Metals Company

  • Tomorrow: Cal-Maine Foods, Kura Sushi, RPM International, AAR Corp.

MARKET BRIEF
Leading News

EV Underdog Rivian Roars Back: Why This Production Win Signals a Potential Turnaround

Forest Green Rivian R1T electric truck driving on a gravel road in the blue ridge mountains during fall

Why it matters:

After a brutal 43% stock plunge in 2023, Rivian's (RIVN) successful production push suggests the EV maker might finally be shifting from "production hell" to sustainable growth – a critical inflection point for the broader EV market.

Zoom Out:

The market's euphoric reaction to Rivian's latest numbers – sending shares up a record 24.5% – reflects a deeper narrative shift in the EV space. While Tesla (TSLA) dominated the first EV wave, we're entering what Morgan Stanley calls "EV 2.0," where operational execution matters more than bold promises.

Rivian's ability to hit its revised production target of 49,476 vehicles in 2023, despite component shortages, demonstrates the kind of operational maturity that separated Amazon from its dot-com peers in the early 2000s.

Key Insights:

  • Cash burn concerns easing: While Rivian's treasury still glows red-hot from cash burn, delivering 14,183 vehicles in Q4 (beating analyst estimates) suggests improving production efficiency. Think of it as learning to fly while building the airplane – terrifying but increasingly controlled.

  • Supply chain mastery emerging: The company's statement that component shortages "no longer constrain production" echoes Apple's evolution from supply chain amateur to master. In manufacturing, boring operational competence often trumps exciting innovation.

  • Market positioning strengthens: With a premium brand and $12 billion cash reserve, Rivian occupies the sweet spot between mass-market EVs and ultra-luxury offerings. It's like being Lexus in 1989 – premium enough to generate margins, accessible enough to drive volume.

Market Pulse:

"We're seeing a shift from 'Can they build it?' to 'How profitably can they scale it?'" - Laura Johnson, EV analyst at Bernstein

Bull’s Take:

While Rivian still faces the classic manufacturing trilemma of quality, speed, and cost, the company's execution suggests it might be the first serious challenger to Tesla's EV dominance. For patient investors willing to weather volatility, this production milestone could mark the beginning of a compelling growth story.

Headlines

  • Microsoft plans to invest $80 billion on AI-enabled data centers in fiscal 2025 (link)

  • Rival CEO spread doubt about Nippon Steel deal prospects, documents allege (link)

  • United Airlines to bring Musk's Starlink on flights by spring (link)

  • This Year’s CES Will Be All About AI (link)

  • Paychex Is Said to Be in Talks to Buy Smaller Rival Paycor (link)

  • Retail Is Fashionable With Property Investors Again, but Only the Unflashy Kind (link)

CRYPTO
Fear & Greed

 

Headlines

  • Bitcoin could top $125,000 or fall toward $77,000 this quarter — depending on what Trump does next (link)

  • MARA says 16% of its BTC reserves has been loaned to third parties for 'modest' yield (link)

  • Coinbase gains key license to offer derivatives in Europe through acquisition of Bux's Cyprus unit (link)

DAILY SHARE
On the Socials

*Hat-tip to netcapgirl

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