Mega-Cap Tech Stocks Surge as Powell Points to Possible Rate Cut, Tesla Leads Rally

Tesla's stock surged 6% to $340, leading the rally of mega-cap tech stocks after Fed Chair Jerome Powell hinted at possible interest rate cuts. The EV maker benefits from lower interest rates, making it easier for consumers to finance big-ticket purchases. Despite this, Tesla's stock has lost 15% this year due to Musk's political activities, sales slump, and concerns over the expiration of EV tax credits.

Tesla's stock surged 6% to $340 on Friday, leading a rally among mega-cap tech stocks after Federal Reserve Chair Jerome Powell hinted at possible interest rate cuts. The electric vehicle (EV) maker benefits from lower interest rates, which make it easier for consumers to finance big-ticket purchases. However, Tesla's stock has lost 15% this year due to Elon Musk's political activities, a sales slump, and concerns over the expiration of EV tax credits.

Powell's speech at the annual gathering in Jackson Hole, Wyoming, suggested that the Fed might adjust its policy stance in response to a hiring slowdown and tariff-driven price increases. This signalled a potential interest rate cut, sending investors' expectations soaring. Minutes after the speech, the chances of a quarter-point interest rate cut were pegged at 91%, up from a 75% chance assessed one day earlier [1].

Despite the market's positive reaction, Powell voiced caution about the outlook for the U.S. economy, noting the challenging situation posed by a hiring slowdown and tariff-driven price increases. The Fed chair emphasized the central bank's dual mission to maximize employment and control inflation [1].

Tesla's stock price increase comes as institutional investors have been boosting their holdings in the company. PGIM Custom Harvest LLC, for instance, increased its holdings in Tesla by 66.7% in the first quarter, owning 8,212 shares of the stock [2]. Other institutional investors, such as Cherry Tree Wealth Management LLC, First PREMIER Bank, and Newton One Investments LLC, have also increased their stakes in Tesla [2].

However, Tesla's stock has faced several headwinds this year. Musk's political activities and controversies have drawn criticism and may have negatively impacted the company's image. Additionally, Tesla's sales have been sluggish, and concerns over the expiration of EV tax credits have cast a shadow over the company's future prospects. Despite these challenges, the potential for lower interest rates could provide a tailwind for Tesla's stock.

References:
[1] https://abcnews.go.com/Business/dow-closes-840-points-after-fed-chair-powell/story?id=124897730
[2] https://www.marketbeat.com/instant-alerts/filing-tesla-inc-tsla-stock-holdings-lifted-by-pgim-custom-harvest-llc-2025-08-21/