Tesla stock is continuing its upward trend for the third consecutive day, gaining in early trading on Tuesday. After a selloff on Thursday, Friday’s gain was seen as a bounce back, and Monday’s increase was attributed to several factors, including the Cybertruck. However, today’s rise is mainly due to the inflation figures.
The consumer price index (CPI) for October showed a year-over-year climb of 3.2%, slightly lower than the rates recorded in September and August (3.7%). Economists had expected a figure of 3.3%, according to FactSet.
This inflation reading “beat” is viewed positively for stocks as it indicates lower inflation. Lower inflation suggests that the Federal Reserve’s strategy of raising interest rates is effective. It also implies that the Fed can ease off on its efforts to curb economic activity.
Tesla, along with other car companies, has been significantly affected by higher interest rates. Since many cars are purchased with financing options, the impact of higher rates has offset the benefits of Tesla’s price cuts, as noted by CEO Elon Musk during the third-quarter conference call in October.
Despite some versions of the Model Y being 25% cheaper to purchase compared to last year, the monthly payment remains unchanged in certain scenarios due to higher interest rates.
In early trading on Tuesday, Tesla stock was up by 4.5%, while the S&P 500 and Nasdaq Composite were up by 1.7% and 2.1%, respectively.
Notably, other consumer discretionary stocks are also performing well. Amazon.com (AMZN) shares have risen by 2.6%, while Ford Motor (F) and General Motors (GM) shares have increased by 5.2% and 4.1%, respectively.
Yesterday, Tesla shares saw a gain of 4.2%, and although there wasn’t any significant news to attribute this rise to, some minor factors played a role. CEO Elon Musk tweeted that an updated version of Tesla’s autonomous driving software, known as Full Self Driving, would be ready in a couple of weeks.
On Friday, Tesla stock rose by 2.2%, following a 5.5% dip triggered by HSBC analyst Michael Tyndall’s initiation of coverage on Tesla with a Sell rating and a price target of $146.
As of midday trading on Tuesday, Tesla stock has increased by approximately 22% over the past 12 months.
