Trump Boosts Tesla, CPI Sends Nasdaq Soaring

Wednesday, 11 December, was an eventful day for the stock market. Both Electric Vehicle giant Tesla (TSLA) and the tech-heavy Nasdaq (NQ) soared, each for their own reason. 

Let’s take a look at what’s driving the market’s biggest names upward:

Tesla’s New Record High 

It is no secret that Donald Trump’s re-election has caused notable volatility across a wide range of markets since his re-election, and Elon Musk’s Tesla is no exception.

On Wednesday, 11 December, Tesla hit an all-time high of $424.77, surpassing its previous record high of $409.97 on 4 November 2021. Interestingly, despite the rising competition from Chinese & American EV makers like XPeng (XPEV), BYD (1211.HK), Ford (F), and General Motors (GM), Tesla gained about 71% this year. 

These noticeable gains seem mostly attributed to Trump’s re-election. Tesla’s CEO, Elon Musk, has invested about $227 million in pro-Trump campaigns, advocating for him through social media platforms like X (formerly Twitter). Moreover, it may be worth noting that Musk and Republican presidential candidate Vivek Ramaswamy will lead The Trump administration’s “Department of Government Efficiency.” This means that Musk will be able to influence federal agencies’ regulations, budgets, and staff. Apparently, Musk intends to use this to automaker companies’ advantage as he revealed that he will establish a “federal approval process for autonomous vehicles.”  

Given the above, it may not be surprising that Tesla has gotten a boost this year, in general, and in recent months, in particular. 

What Do Analysts Think?

According to analyst Craig Irwin Tesla “is responding to the Trump bump,” adding that “Musk’s authentic support for Trump likely doubled Tesla’s pool of enthusiasts and lifted credibility for a demand inflection.”

Goldman Sachs analysts have also boosted Tesla’s price target, explaining that “the market is taking a more forward-looking approach to Tesla, including with respect to its AI opportunity.”

Others believe that Trump’s presidency will facilitate the full self-driving (FSD) approval process for Tesla’s software and Robotaxi services, which can, in turn, boost Tesla prices. (Source: Yahoo Finance)

However, only time will reveal how Trump’s imminent presidency will actually affect this EV giant in the long term. 

The Nasdaq Soars

On Wednesday, the tech-heavy Nasdaq soared by 1.7%, surpassing 20,000 for the first time,  as interest rate cut hopes loomed following the release of US Consumer Price Index data. 

While November’s inflation was still high, it did not exceed expectations, which increased hopes of Fed rate cuts. The data was as follows:

• Inflation rose 2.7% on a yearly basis in November (slightly above October’s 2.6%).

• Inflation rose 0.3% on a monthly basis in November (above October’s 0.2%).

• Core inflation rose 3.3% YoY (matching October’s figures).

Given that inflation was in line with the expectations, markets posited that rate cuts would materialise. 

Tech giants Alphabet (GOOG), Nvidia (NVDA), Salesforce (CRM), Amazon (AMZN), and Meta (META) also soared that day. On the flip side, whereas the Nasdaq gained, the Dow Jones Industrial Average (USA 30) lost 0.2% as healthcare stocks like Johnson & Johnson (JNJ) and UnitedHealth Group (UNH) traded lower. 

Conclusion

In conclusion, 11 December was a pivotal day for the stock market, driven by notable movements in both Tesla and the Nasdaq. 

Tesla's record-breaking performance, fueled by the influence of Elon Musk’s political ties and the anticipation of regulatory advantages under a Trump presidency, underscores the company's strong momentum despite increasing competition. Meanwhile, the Nasdaq's surge, fueled by optimism surrounding potential interest rate cuts and stable inflation, highlights investor confidence in the tech sector, particularly in companies like Alphabet, Nvidia, and Amazon. 

As these trends unfold, the long-term impact of political and economic factors on these market leaders will remain an important aspect to monitor.