Al Root
Tesla stock was rising at the start of Thursday's trading day. Like most of this week, news about Tesla wasn't what was driving shares.
Company and economic data are boosting hopes for a so-called Goldilocks scenario that can benefit Tesla and other auto makers.
Shares of the electric vehicle maker were up 6.6% in morning trading at $214.58, while the S&P 500 and Dow Jones Industrial Average were up 1.2% and 1%, respectively.
The market jumped after better-than-expected jobless claims and retail sales data. Initial claims, a proxy for labor market strength, slid to 227,000 for the week ended Aug. 10 from the prior week's revised level of 234,000, the Labor Department said Thursday. Retail sales climbed 1% month over month in July, surpassing economists' expectations for a 0.3% increase.
The data helped calm investor fears about a slowing economy while inflation data earlier this week likely kept the Federal Reserve on a path to cut interest rates later this year.
Strong consumer spending with lower interest rates is about as good of an economic scenario as investors could have hoped for. Lower rates will help make car purchases more affordable. That is helping shares of other auto makers, too. General Motors was up 3.1%. Ford Motor and Stellantis shares gained 2.6% and 1.7%, respectively.
Tesla shares ended Wednesday 3.1% lower despite some of that better-than-expected inflation data. Consumer prices rose 2.9% year over year in July. Economists were looking for a 3% rise.
The drop for Tesla stock was a little surprising considering GM stock rose 0.7%. Still, Tesla stock gained 5.2% on Tuesday after better-than-expected wholesale inflation data were released. Coming into Thursday trading, shares were up about 0.7% for the week.
The path Tesla stock takes to get anywhere isn't typically smooth though. Shares so far have moved more than 1% each day this week, falling twice and rising once. Shares have moved more than 3%, up or down, in 11 of the 16 trading days since the company reported second-quarter earnings on July 23.
It has been a wild ride recently for Tesla shareholders. Economic data has probably been the most significant news impacting the stock this week.
Investors also had to digest tidbits from CEO Elon Musk's roughly two-hour conversation with former President Trump on Monday. The conversation generated a complaint by the United Auto Workers union claiming Musk has violated labor laws by intimidating workers who might like to unionize. It's unlikely, however, that the complaint will become a stock-moving issue in the coming months. Tesla didn't respond to a request for comment about the complaint.
Truisit analyst William Stein also wrote up his recent experience with Tesla's latest full self-driving, or FSD, software update in a Wednesday report. While acknowledging that reviews for the update have been positive, he still had trouble with the product.
FSD is Tesla's highest-level driver-assistance product. The company uses artificial intelligence to develop the software. Musk believes it will eventually be good enough to turn Teslas into truly self-driving cars. Today, the system still requires drivers to pay attention 100% of the time.
Stein made headlines when his July review of an earlier software version noted that his intervention was required to avoid an accident. Stein still called it "shockingly good," noting that FSD can't do all the driving. He isn't sure when or if FSD will solve the autonomous-driving equation for good.
Coming into Thursday trading, Tesla stock is down about 19% this year. Slowing demand growth for EVs has weighed on investor sentiment. Tesla delivered about 831,000 vehicles in the first half of 2024, down almost 7% year over year.
Wall Street expects deliveries to grow again in the second half. Analysts project about 950,000 deliveries in the third and fourth quarters combined, up about 3% year over year.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
August 15, 2024 11:22 ET (15:22 GMT)
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