By Joyce Yu
Philadelphia, PA–Tesla shares soared more than 7% to $365 a share on Tuesday afternoon on news that Tesla CEO Elon Musk is considering taking Tesla private.
In his latest tweet, Musk said he has secured funding from a private buyer, implying the funding values the company at $420 a share. Shares are jumped as high as 9% after his tweet, extending its recent rally driven by a Financial Times report that Saudi Arabia has quietly built a big stake in Tesla.
Tech stocks outperformed the market on Tuesday, with Google’s parent Alphabet gaining 2% and Microsft adding 0.6%. The S&P 500 was within striking distance of a record high fueled by strong second-quarter earnings. The Nasdaq and the Dow are both just inches away their all-time highs. The Cboe Volatility Index fell to, its lowest level since Jan. 16.
“We have a good broad picture of what the earnings season looks like already, and for the most part it has been very positive,” Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas, told the Reuters. So far, 413 S&P 500 companies that have reported earnings so far, 79.2% of which have topped estimates.
“I think in terms of a report card, we can give it an A,” Art Hogan, chief market strategist at B. Riley FBR, said to CNBC. “Corporate earnings have been strong, but we’ve also seen strength in revenue.” He added, “When you think about what’s driving markets right now, it’s a tug of war between solid U.S. fundamentals and concerns around trade.”
“When you think about trade with China, it feels like the situation is escalating. But with Mexico, Canada and the European Union, it seems like it’s heading in the right direction.”
Separately, The S&P 500 is set to usher in a major structural change in about six weeks. Facebook and Google’s parent Alphabet will move out of the index’s technology sector and to a newly formed communication services sector to make tech appear less dominant in the S&P 500.
Effective on Sept. 21, the reshuffle is expected to reshape how people think about the weightings of tech in the S&P, said DataTrek Research co-founder Nicholas Colas on CNBC’s “Trading Nation.” “You’re going to see a major downgrading of tech weightings in the S&P 500 when this change happens, and that’s purely an illusion. That’s just reclassifying the names and the sectors.”
