The Nasdaq Composite and S&P 500 are up more than 2.5% and 1% respectively, reaching all-time highs this week. The Dow has increased by 0.5%. Recent economic indicators, such as higher weekly jobless claims and a contraction in the service sector, suggest a softening economy that may influence the Federal Reserve's future monetary policy decisions. Despite these concerns, major indices are set to end the week positively. These are our stock picks of the week:

NVIDIA

Nvidia shares increased by 3.84% this week, recovering from recent volatility. The chipmaker's stock has risen over 10% in the past month and is up 159% year-to-date, fuelled by ongoing excitement around artificial intelligence. Analysts remain bullish, with 89% giving it a buy or overweight rating and 11% rating it as a hold. The mean analyst target price of $129.01 suggests a 0.6% upside potential.

NVDA (H1). After last month’s stock split, Nvidia made its all-time high at 140.00 and struggled below 126.00. But buyers came back last Friday, broke the barrier and confidently created another bullish momentum.

MCDONALD’S

McDonald’s new $5 value meal could boost its struggling stock. The meal, which includes a McChicken or McDouble burger, four-piece chicken nuggets, small fries, and a small drink, launched on June 25 and offers a 40% discount compared to core menu prices.

Historically, McDonald’s value meal promotions have positively impacted stock performance. Past value offerings, such as the Original Dollar Menu and the Breakfast Dollar Menu, helped the company outperform the S&P 500 and modestly increased stock prices. Analyst predicts the $5 meal could improve US same-store sales by 50 to 100 basis points.

MCD (Daily). Making an obvious grid in a bearish period, Mcdonald's is expected to bounce back supported by its fundamental factor. If it goes above 250.00 to confirm the triple-bottom formation, then the next potential targets could be 265.00 and 277.00.

TESLA

Tesla’s strong deliveries report has hurt traders betting against the company’s stock. The stock surged 17% in two days, resulting in an estimated $3.5 billion in losses for short sellers, according to S3 Partners. Tesla shares have increased 73% since their April low, closing at $246.49 before US Independence Day, nearly erasing their year-to-date losses.

Tesla has been offering discounts and financing deals due to an ageing lineup and increasing competition. In Q2, the company cut prices in Germany and Norway and offered zero-interest loans in China. In the US, Tesla provided a three-year, 2% APR financing deal for the rear-wheel drive Model 3. However, the new Cybertruck has faced quality issues, resulting in four voluntary recalls in the US within a year.

TSLA (Daily). Underestimated by the buyers because it dropped below 140.00 or nearly 50% of its 2024 high, this stock regains its momentum too quickly. The price may hit the 263.70 level again, but profit-taking is expected to present an opportunity to buy at a discounted price.


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Fullerton Markets Research Team

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