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Healthy job gains spur sell-off as market expects higher rates

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  • NIO fell by 7.9% during Thursday’s trading session.
  • Nio received a slight price target downgrade from Mizuho on Thursday.
  • The company is also set to launch in Germany on Friday.

UPDATE: Nio stock dropped as much as 5.5% to $13.96 in the early going on Friday. Most growth stocks were in the same boat as the US economy reported 263,000 new jobs and a drop in the unemployment rate during September to 3.5%. This led most US stocks to sell off as consensus had been 250,000 jobs and a 3.7% unemployment rate. The data suggests that the US economy remains red hot and the jobs markets severely tight. Both of these situations should keep inflation from dropping much. The market is interpreting the news as another sign that the Fed will need to tighten even more by raising interest rates, an activity that sends bond yields surging and equities tumbling. The Nasdaq plunged wildly by 2.6%, and the two sessions of postive gains on Monday and Tuesday are now well forgotten.

Nio (NIO) tumbled further on Thursday on the eve of its launch in one of the largest automotive markets outside of China. Shares of NIO dropped by a further 7.9% and closed the trading session at a price of $14.77. Stocks fell for the second straight day following the two-day rally to start the month. Investors paused ahead of the key payroll and employment report for September that will be released on Friday. If a positive report is released, investors fear the Fed could continue with its hawkish rate hikes. Overall, the Dow Jones lost 346 basis points, the S&P 500 fell by 1%, and the NASDAQ dropped by 0.7% during the session. 

Nio stock price

Following its third quarter deliveries report and on the eve of further European expansion, Nio received a slight downgrade from a Mizuho analyst. Vijay Rakesh reiterated his Buy rating for the stock but lowered his price target from $42 to $40. Rakesh noted that Nio’s deliveries came in lower than he expected and that continued supply chain and production headwinds could affect Nio in the short term. Rakesh also downgraded his price target for Tesla (TSLA) to $370 due to its own delivery miss last quarter. 

Nio is also set to launch its first vehicles in Germany tomorrow at a company event in Berlin. Nio will be releasing the ET7, the ES7 and the all-new ET5 sedan during its latest European expansion. The ET5 was just launched in September and is believed by many, including Rakesh, to be one of the strongest challengers for Tesla’s Model 3. 

NIO 5-minute chart for 10/6/22

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