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Tesla Soars 8% Overnight Amid Hopes of Trump's Return and Promises to Musk

AInvestWednesday, Nov 6, 2024 5:00 pm ET
1min read

Tesla shares surged overnight, with investors apparently betting on the potential return of Donald Trump, which could significantly benefit Elon Musk, Tesla's CEO. The stock rose by 8% during after-hours trading on Robinhood's platform. Musk, a staunch supporter, previously donated $75 million to a super PAC advocating for Republican candidates. Trump has promised to appoint Musk as Chairman of a committee focused on governmental efficiency if elected. During a rally at Madison Square Garden, Musk claimed he could slash the federal budget by $2 trillion, emphasizing government efficiency.

Despite Tesla's recent rise, the stock had previously lagged behind the broader market, increasing only about 1.2% this year compared to the S&P 500's 21.2% gain. However, a regular session on Tuesday saw a 3.5% increase for Tesla, breaking a six-day losing streak.

The broader U.S. market and other global assets reacted strongly following Trump's announcement of his electoral victory for the 2024 presidential election. In a significant market movement, major U.S. indices saw notable increases. This was driven by investor speculation that Trump's policies could benefit corporate profits, with expected boosts from potential tax cuts under his leadership.

The anticipation of Trump's return has also cast a shadow over the Federal Reserve's rate-cut path. Market expectations for rate cuts in November and December have adjusted, currently anticipating a 41 basis-point reduction. Analysts caution that Trump's potential fiscal policies, particularly those boosting inflation and increasing fiscal deficits, could dampen the pace of Fed rate cuts.

Trump's anticipated policies have triggered substantial shifts in currency and commodity markets. The dollar index surged past the 105 mark, hitting a four-month high, as his win stoked expectations of aggressive fiscal expansion and trade protectionism, potentially lifting inflation. Concurrently, commodities were pressured, with gold prices dropping and oil experiencing fluctuations, driven primarily by the strengthening dollar and rising bond yields.

With Trump pledging to reignite initiatives of his previous administration, including potential tariff escalations with China, market dynamics remain in flux. Institutions recommend diversifying asset allocations to reinforce portfolio resilience in the face of potential volatility across equities, bonds, and commodities.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.