Tesla (TSLA. US) sharp gains on Tuesday showed how eager investors are to ignore a string of market risks, from the Russian-Ukrainian conflict, rising interest rates to slower economic growth and betting on stock market winners.
Tesla's stock price surged 7.9 percent on Tuesday, its biggest one-day gain since Jan. 31, propelling the consumer discretionary sector to become the biggest gainer in the S&P 500, up 2.5 percent, compared with a 1.1 percent gain on Tuesday. But Tesla isn't the only one that's rallying so strong. Automaker and retailer Etsy Inc. and Nike (NKE. US) and Wynn Resort (WYNN. US) and Booking (BKNG. Strong performance by travel-related companies such as the US) also drove the consumer discretionary segment higher. Meme shares have also recovered, with GME. US) shares soared 31 percent.
Against the backdrop of continued declines in U.S. Treasuries, yields on 10-year Treasuries reached their highest level since May 2019. The move is to ignore the Fed's aggressive rate hike mechanism aimed at curbing the fastest rate of inflation in 40 years.
Steve Sosnick, chief strategist at interactive brokerage, said: "The mindset of many investors has become FOMO (fear of missing out) and they certainly don't care about the pessimistic message from the bond market. "Is the value of Amazon or Tesla suddenly up 20-25% from two weeks ago?" Or is GameStop worth 30% more today than it was yesterday? The market narrative has changed dramatically. ”
Of course, many different aspects of positive news boosted the market's optimism at the meeting. Tesla's new factory in Berlin is a welcome development as automakers around the world grapple with persistent supply shortages, putting pressure on production plans. At the same time, Nike unveiled healthy gains, giving investors a "sigh of relief" and highlighting the brand's strength.
Tesla, in particular, may just be in the right place at the right time. Since the Russian-Ukrainian conflict, oil prices have soared and are now hovering at their highest level in more than a decade, benefiting Tesla with growing investor interest in electric vehicles. As investors chased the stock market winners, the stock market also rebounded. Since the escalation of the Russian-Ukrainian conflict on February 23, Tesla's stock price has risen by 30%, the consumer discretionary sector has risen by 10% in the same period, and the S&P 500 index has risen by 6.8% over the same period.