Tesla Surges on Upgrade
In premarket trade on Monday, the shares of Tesla Motors Inc. (TSLA, +4.70%) surged by 5 percent. This came in response to an upgrade by Morgan Stanley which raised its price target on the electric car company’s shares from $280 to $465, up 66%. This price target is about 81% above Tesla's current trading level. In addition to this bullish upgrade, Morgan Stanley also stated that Tesla is well positioned in order to dominate in the autonomous driving and technology world. In their note, Morgan Stanley went on to say that as a result of technological advancements, a shift away from human-driven, privately owned internal-combustion vehicles is evident and that within the next year, it is likely that Tesla will start to share “formalized business plans on shared mobility”. According to Morgan Stanley, once the Model 3 model is launched by Tesla, this could then form the basis for the company’s Mobility 1.0 urban transport PODS (Position on Demand Service) in 2018. That is, Tesla is currently building unparalleled infrastructure for the charging of their electric cars as well as other services and these can easily be adjusted to a shared mobility model. In addition, the release of the Model X in September, with the introduction of advanced software and sensor capabilities, is likely to set the standard for self-driving technology. Since the beginning of 2015, Tesla shares have gained 9.3%. In comparison, the S&P 500 index (SPX) has gained 1.2% over the same period. Tesla shares are currently trading at $253.70 each.
In U.S. trading on Monday, stocks ended higher. This came in response to the positive data released regarding the housing sector which seemed to outweigh the poor New York manufacturing report. Data released showed that the home builder confidence index rose to its highest level in almost a decade while the New York-area manufacturing conditions declined to its lowest level since the recession. That is, the Empire State general business conditions index dropped from a reading of positive 3.9 in July to a reading of negative 14.9 in August. At the close of trading, the S&P 500 index (SPX) advanced 0.3%, or 6 points, to 2,097. Also on the upside was the tech heavy Nasdaq Composite index (COMP) which rose 0.4%, or 22 points, to 5,070. Meanwhile, the Dow Jones Industrial Average (DJIA) erased its triple-digit loss and added 0.3%, or 46 points, to 17,524.
On Monday, the U.S. dollar held steady. This came after data from the Federal Reserve Bank of New York showed that the manufacturing activity in the New York region declined in August to its lowest level since November 2009. That is, as a result of a sharp decline in shipments and new orders, the Fed’s general business conditions index dropped in August to -14.9 from 3.86 in July. This missed analysts’ expectations for an uptick to 5.0. To put it into perspective, on the index, if a reading is below 0.0, this indicates declining conditions while above 0.0 indicates improving conditions. The EUR/USD held steady at 1.1109 while the greenback also traded steady against the Swiss franc (CHF) and the British pound (GBP). Against the currencies in Canada and Australia, the U.S. dollar traded higher with the USD/CAD up 0.25% at 1.3121 while the AUD/USD dropped 0.19% at 0.7369. Also, the US dollar index was firm at 96.62.
In early morning trade on Tuesday, U.S. crude futures rallied. This came in response to demand prospects from China as a result of a weaker yuan while investors have now shifted their attention to the industry estimates of stockpiles for last week out of the U.S. WTI crude oil for delivery in October traded at $42.36 a barrel, down 0.13 percent. Today, the API (American Petroleum Institute) will release the estimates of refined products and U.S. crude stocks as of at the end of last week. Meanwhile, Brent crude oil for delivery in October traded at $48.70, down 1%, or $0.49, on the Intercontinental Exchange (ICE) in London. The spread between the U.S. and the international benchmarks of crude stood at $6.38. This was below the level on Friday which was at $6.58.