Tesla
stock is trying to make it three days in a row, up again in early trading Tuesday.
Friday’s gain seemed to be a bounce back from a Thursday selloff. Monday seemed to be about several things including Cybertruck. Tuesday’s gain is all about inflation.
The consumer price index climbed 3.2% year over year in October, compared with the 3.7% rate recorded in September and August. Economists were looking for 3.3%, according to FactSet.
It’s an inflation reading “beat” which is good for stocks. Lower inflation means the Federal Reserve’s cycle of raising interest rates is working. It also means that the Fed can take its foot off the economic brake pedal.
Tesla,
and other car companies, have been significantly impacted by higher interest rates. Many cars are purchased with some form of financing. Tesla CEO Elon Musk lamented on his company’s third-quarter conference call in October that higher rates have essentially offset all the benefits of Tesla’s 2023 price cuts.
Some versions of the Model Y are 25% less expensive to purchase than they were a year ago. But with higher rates, the monthly payment in some scenarios is unchanged.
Tesla stock was up 4.5% in early trading, while the
S&P 500
and
Nasdaq Composite
were up 1.7% and 2.1%, respectively.
Cars are considered discretionary purchases. Other consumer discretionary stocks are doing well.
Amazon.com
(AMZN) shares are up 2.6%.
Ford Motor
(F) and
General Motors
(GM) shares are up 5.2% and 4.1%, respectively.
Tesla shares gained 4.2% in Monday trading. There wasn’t all that much big news to pin gains on. Instead, there were a few little things such as CEO Elon Musk tweeting that an updated version of Tesla’s autonomous driving software it calls Full Self Driving would be ready in a couple of weeks.
Tesla stock rose 2.2% on Friday. That gain followed a 5.5% drop after HSBC analyst Michael Tyndall launched coverage of Tesla stock with a Sell rating and $146 price target on Wednesday evening
Through midday trading Tuesday, Tesla stock is up about 22% over the past 12 months.
Write to Al Root at [email protected]
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