Tesla Inc TSLA shares are trading lower by 2.66% to $274.97 Thursday morning amid overall market weakness. Major indexes are lower following better-than-expected US jobs data, which could raise concerns over further rate hikes. Additionally, Dallas Fed president Logan said more rate hikes are likely necessary.
See Also: Tesla Pledges To Maintain 'Core Socialist Values' In China With Local EV Rivals
What Happened?
In the latest June FOMC Minutes, the Federal Reserve highlighted that while job market conditions remain tight, there were some signs of supply and demand in the labor market moving toward a better balance.
These new labor market data points arrive just one day before the highly anticipated non-farm payrolls report, which is set to be released Friday morning...Read More
What Else?
Higher interest rates increase the cost of borrowing for businesses, including electric vehicle manufacturers like Tesla. This can lead to increased expenses for financing investments, such as expanding production capacity or developing new technologies. Higher financing costs can reduce profit margins and potentially impact Tesla's ability to invest in future growth.
Additionally, as interest rates rise, investors may reassess the valuation of growth-oriented companies like Tesla, which typically rely on future cash flows and long-term growth expectations. Increased discount rates resulting from higher interest rates can lead to downward pressure on stock prices as investors adjust their expectations.
Tesla shares have otherwise rallied some 155% on a year-to-date basis amid overall market strength and strong second-quarter delivery numbers.
According to data from Benzinga Pro, TSLA has a 52-week high of $314.67 and a 52-week low of $101.81.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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