Shares of EV producer Tesla (TSLA) spent the day in rally mode as investors bid the stock more than 6.5% higher for the day.
Interest in Tesla was stoked by the Fed’s lowering of interest rates on Wednesday as consumer discretionary stocks are one of the winning sectors in a low rate environment.
For more than two years, consumers have been squeezed by inflation and high interest rates, both of which have had an affect on the auto industry. The Fed’s now interest rate trajectory – which forecasts another 0.5% drop before year-end – should result in an increase in high-price purchases such as cards and homes.
Tesla stock is also benefiting from the upcoming robotaxi event in early October. Wall Street analysts and institutional investors are eagerly awaiting news on Tesla’s project as it is seen to be the next revenue booster for the company.
Today’s buying pushed Tesla shares above the $235 price, a level that has been stubbornly providing resistance since July.
Shares also broke above their top Bollinger Band, suggesting a new wave of bullish volatility is set to carry the stock to $250. That surge is also a sign that investors are looking to enter the stock ahead of the October 10 robotaxi event.
Shares of Tesla have been in a long-term bull market trend since July and hold a target of $300.
Another stock benefitting from the consumer discretionary “bump” is Paypal Holdings (PYPL).
The peer-to-peer payment service recently announced expansion of their services with Amazon.com sellers ahead of the Fed’s interest rate decision. Those two drivers resulted in a 6% surge on Thursday.
Paypal whares have been lagging the broader indices while trading in a long-term bear market trend until last month. Investors have increased their interest in holding Paypal on the forecast that consumer activity will increase with lower rates.
Additionally, Paypal often benefits from a pre-holiday surge as investors anticipate higher revenue from the upcoming holiday shopping season.
Today’s rally settles the stock above $75 for the first time since February 2023. Since then, shares formed a long-term bottom at $50, a psychologically significant price for investors.
The stock’s 50-day moving average turned bullish in early August ahead of the most recent rally, which the shares running 22% higher as sentiment turns bullish on the stock.
Paypal shares are in a newly formed bullish trend with a price target of $100.
Bitcoin and its associated stocks like MicroStrategy Inc. (MSTR) pushed higher on Thursday after the fed’s interest rate announcement.
Shares of the cryptocurrency mining operation surged more than 6% higher to break above $75 and a key volatility indicator.
Last week, MicroStrategy shares dropped as far as $67.15 as the price of Bitcoin fell. Selling in Bitcoin appeared to increase as investors sold the risk-on/risk-off asset on fear that the economy may have been headed towards a “hard landing”.
Yesterday’s comments from Fed Chairman Jerome Powell assured investors that the economy has remained robust and that the latest interest rate cut was to catch-up with the drop in inflation, not to stimulate a flagging economic outlook.
That confidence sent Bitcoin higher, resulting in a new 52-week high for MicroStrategy stock.
The move above $75 puts MicroStrategy above its top Bollinger Band. The move above this measure of a stock’s volatility suggests that the stocks is prepared to make a fast and aggressive move even higher.
Last month, shares of MicroStrategy shifted into a long-term bull market trend as trading volume on the stock increased.
That, combined with the strength in Bitcoin as investors begin to speculate on the cryptocurrency asset class moving higher targets a move to $100 for MicroStrategy stock.
