Tesla Boosts Stocks To Record Highs As Markets React To Trump Assassination Attempt
KEY FACTS
The Dow Jones Industrial Average rose 200 points, or 0.5% to a record high, while the S&P 500 jumped 0.4% and the tech-heavy Nasdaq gained 0.6% to just shy of their record intraday peaks set last week.
The most notable individual riser was Tesla, the electric vehicle titan helmed by the world’s richest person Elon Musk, as shares of the company gained 5% to over $260, the largest gain of any stock with a market capitalization over $60 billion, according to Yahoo Finance data.
The gain for Tesla stock, which is up some 31% in July, comes two days after the firm’s chief executive Musk officially endorsed Trump, and analysts believe a Trump win in November can help Tesla as his proposed tariffs on Chinese imports should help Tesla maintain its dominant share in the U.S. electric vehicle market due to the potential blockade on cheaper Chinese cars.
Overseas stock market performance overseas was largely negative Monday, with Hong Kong’s Hang Seng declining 1.5% after China’s quarterly economic output growth was worse than forecasted and the United Kingdom’s FTSE 100 index fell 0.8% after luxury retailer Burberry warned about profits.
Other assets linked to entities seen as beneficiaries of a Trump election also rallied, as bitcoin, the largest cryptocurrency, gained 3%, and the S&P’s energy and financial services sectors rose 0.6% and 0.9% respectively, with all three asset classes boosted by expectations for lighter regulation under Trump.
WHAT TO WATCH FOR
How the Republican National Convention beginning Monday in Milwaukee further roils markets. “Post the shocking assassination attempt the convention rhetoric and energy will be even more in focus than it would otherwise have” been in financial markets, JPMorgan credit markets strategist Eric Beinstein, wrote to clients Monday.
KEY BACKGROUND
Considering Trump’s mostly hostile stance toward electric vehicles, Tesla stock’s bounce may seem like a surprise, but Musk and Trump’s friendly relationship and the potential for Tesla to reap a “clear competitive advantage” in the electric vehicle market may outweigh the negatives posed by demand headwinds posed by the potential end of the federal tax credit for electric vehicle purchasers. The stock market performed strongly under both Trump and former President Joe Biden, but far better under Biden, with the S&P returning 70% from Election Day 2016 to Election Day 2020 and 77% since Biden’s 2020 election, according to FactSet data (the S&P rose an average of 8.8% annually from 1972 to 2022). Presidential politics are just a small part of the stock market story, and the Oval Office has less of an impact on equity valuations than another Washington government office, the Federal Reserve, the largely independent U.S. central bank which determines interest rates.
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