Tesla, the electric vehicle (EV) maker, experienced a significant surge in its stock price on Monday, leading to a rise in Wall Street. Investors eagerly awaited the release of inflation data later in the week, hoping to gain insights into the potential interest rate path set by the US Federal Reserve.
Morgan Stanley’s upgrade of Tesla to overweight from equal-weight contributed to the 5.8% jump in the company’s shares. The investment firm believes Tesla’s Dojo supercomputer could have a profound impact on the company’s market value, potentially increasing it by nearly $600 billion. Other mega-cap stocks such as Alphabet, Microsoft, and Amazon also saw gains ranging from 0.4% to 1.1%.
The consumer discretionary sector of the S&P 500, which includes companies focused on non-essential goods and services, experienced the highest gains among major sectors, rising by 1.6%. Investors are now eagerly awaiting crucial data on consumer and producer prices, as well as retail sales figures, to gain a better understanding of the US economy’s trajectory.
Wednesday’s consumer price data will provide insight into whether the US economy is heading for a soft landing. This term refers to a situation where the Federal Reserve can curb inflation without significantly impacting economic growth. According to Hugh Anderson, Managing Director at HighTower Advisors, it is expected that the inflation numbers will at least remain flat, if not higher. Anderson anticipates at least one more interest rate hike, with no rate cuts in the near future unless there is a significant decline in employment.
Wall Street’s main indexes experienced losses the week before due to rising oil prices and stronger-than-expected economic data, which raised concerns about persistent inflation and the possibility of higher interest rates in the long run.
Traders estimate a 93% chance that the Federal Reserve will maintain its current interest rates in the September meeting. The odds of a rate pause in November stand at nearly 61%, according to the CME FedWatch Tool. Treasury yields, considered an indicator of short-term interest rate expectations, showed a slight increase on Monday, with two-year note yields hovering around 4.9948%.
Federal Reserve officials have entered a blackout period, during which they traditionally refrain from making public comments until the policy decision is announced on September 20.
As of 9:47am ET, the Dow Jones Industrial Average was up by 156.55 points (0.45%) at 34,733.14, the S&P 500 rose by 19.46 points (0.44%) to 4,476.95, and the Nasdaq Composite increased by 71.42 points (0.52%) to 13,832.94.
In addition to Tesla, other stocks also experienced notable movements. Qualcomm, a chipmaker, rose by 3.6% after signing a new deal with Apple to supply 5G chips to the tech giant until at least 2026. Hostess Brands witnessed a substantial jump of 18.8% after JM Smucker announced its plan to acquire the Twinkies-manufacturer in a deal worth $5.6 billion. Meta Platforms, formerly known as Facebook, saw its shares rise by 1.8% following a report that the company was working on a more powerful artificial intelligence system.
On the New York Stock Exchange, advancing issues outnumbered decliners by a ratio of 3.46-to-1, while on the Nasdaq, the ratio stood at 2.01-to-1. The S&P index recorded 10 new 52-week highs and five new lows, while the Nasdaq recorded 14 new highs and 46 new lows.