—— Fed Signals Two More Rate Hikes; Tesla’s Longest Rally Ends; Private Equity Firm Raises $16.5 Billion; Kroger Revenue Misses Estimates; Tesla Offers Free Supercharging; US Retail Sales Surprise; Microsoft Hits Record High
1. Fed Signals Two More Rate Hikes
At Wednesday’s meeting, the Federal Reserve paused rate hikes for the first time but indicated that two additional hikes could still be necessary this year, possibly starting in July.
Following 15 months of consecutive hikes, the benchmark interest rate range now stands at 5% to 5.25%.
Chair Jerome Powell stated that the committee believes it should slow the pace of rate increases to give the economy more time to absorb their effects, and that future decisions will be based on incoming data.
James Knightley, ING’s Chief International Economist, noted that the Fed now enjoys greater flexibility—it can raise rates if the economy remains hot or reverse course if it weakens.
Fed officials currently project the benchmark rate to fall to around 3% by 2025.
______
2. Tesla’s Longest Rally Ends
After rising for 13 consecutive trading sessions with a cumulative 41% gain, Tesla shares finally retreated this week, entering technically overbought territory.
The rally was fueled by a series of positive developments, including GM and Ford adopting Tesla’s Supercharger network, Tesla Model 3’s full tax credit eligibility, and broader AI-driven tech stock momentum.
However, following the Fed’s hawkish stance on Wednesday, Tesla shares dropped over 4% in premarket trading alongside Nvidia and other tech stocks.
Tesla’s recent surge appears detached from fundamentals and may soon experience a correction.
______
3. Private Equity Firm Raises $16.5 Billion
Despite a tougher fundraising environment amid high interest rates and falling valuations, U.S. private equity firm TA Associates successfully closed a new flagship fund at $16.5 billion, 32% larger than its 2021 predecessor.
TA’s success signals ongoing investor confidence in private equity, even as global PE fundraising fell 16% last year to $347 billion, below the five-year average.
Consulting firm Bain & Co. expects fundraising to continue slowing, with many firms opting for smaller fund sizes or launching new strategies.
Following this raise, TA Associates’ total assets under management now exceed $40 billion.
______
4. Kroger Revenue Misses Estimates
Grocery giant Kroger reported fiscal Q1 earnings of $1.51 per share, slightly above analyst expectations of $1.45, but the margin was the narrowest since the pandemic’s onset.
With pandemic-era grocery demand fading, Kroger’s revenue fell short of Wall Street’s projections, as consumers curbed spending amid economic uncertainty.
Vital Knowledge analysts said investors had grown accustomed to Kroger’s previous strong performance, making the mild disappointment harder to accept. Shares fell 3.3% in premarket trading.
Kroger’s revenue rose 1.3% to $45.2 billion, narrowly missing expectations.
______
5. Tesla Offers Free Supercharging
To clear inventory before quarter-end, Tesla launched a promotion offering three months of free Supercharging for Model 3 buyers who take delivery by June 30.
Additionally, buyers of Model S and Model X vehicles will receive three years of free Supercharging benefits.
Earlier this month, all Tesla models became eligible for the full $7,500 federal EV tax credit.
Despite multiple price cuts, Tesla’s EV sales growth has continued to slow.
Elon Musk has emphasized prioritizing revenue growth over profit margins by slashing vehicle prices.
______
6. US Retail Sales Surprise
The U.S. Commerce Department reported today that May retail sales unexpectedly rose 0.3%, following April’s 0.4% increase.
Excluding autos and gasoline, sales rose 0.4%, though inflation adjustments were not factored in.
Of 13 major categories, 10 showed growth, with vehicle-related sales particularly strong.
Although the data beat expectations, underlying consumer demand appears to be moderating.
Retail sales have now surprised to the upside for two consecutive months, signaling continued consumer resilience.
______
7. Microsoft Hits Record High
Today, Microsoft shares rose 2% to $343.83, surpassing the previous record of $343.311 set on November 19, 2021. Year-to-date, Microsoft stock has climbed 43%.
The ongoing AI frenzy has fueled rallies in Microsoft and Nvidia—Microsoft notably backs OpenAI, the developer of ChatGPT.
Additionally, Microsoft plans to collaborate with chipmaker AMD to develop AI processors to compete with Nvidia’s hardware.
Apple stock also hit a record high today, driven by broad tech sector momentum.
______
This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.