As Wall Street’s wild, volatile ride continues, some of tech’s most popular stocks bounced back yesterday from the recent sell-off. The tech-heavy Nasdaq Composite jumped 3.7% just a day after the index slipped into correction territory. Yesterday’s rise was the benchmark’s best single-day performance since November.
Investors have been encouraged to buy cyclical stocks recently, as traditional sectors are expected to make a strong comeback once the economy improves following mass vaccine rollouts. However, this trend reversed with the 10-year U.S. Treasury yield down 0.06% at 1.54% at market close yesterday as Wall Street poured into growth stocks once again.
Tesla stock bounces back
Tesla (NASDAQ: TSLA) shares soared almost 20% on rising demand from China, making it one of the biggest gainers yesterday after sustaining steep losses the last few weeks. The jump in Tesla stock added more than $100 billion to its market capitalization and helped break the EV maker’s five-day losing streak that forced it deeper into bear market territory. The rise was also likely caused by investors buying the dip, as Tesla is still one of the most popular companies in the world right now. At Tesla’s current share price of $673, many believe it is a bargain, especially as it was trading at $804 this time last month. Cathie Wood, CEO of Invest, said on a webcast that she saw the stock market sell-off as a buying opportunity. As Tesla is the largest holding of the fund, the stock’s gains pushed the fund up 10% yesterday.
Tesla sales surge in China
The most significant cause of Tesla’s stock jump was new data which showed an increase in sales in China. The Chinese auto industry body, CPCA, stated that the automaker sold 18,318 China-made vehicles Model 3s and Model Ys in February, up from 15,484 in January. This data was great for investors to see, especially as Tesla’s rivals saw declines, indicating Tesla’s market dominance in the largest EV market in the world.
To compare with Tesla’s three main Chinese-owned EV manufacturers competitors sales for February;
- Xpeng (NYSE: XPEV) delivered 2,223, down from 6,015 in January.
- NIO (NYSE: NIO) sold 5,578, a decline from the 7,225 vehicles sold the previous month.
- Li Auto (NASDAQ: LI) delivered 2,300, down from 5,379 in January.
Despite lower sales figures for February, the three companies’ share prices were boosted by the surge in Tesla stock. On Tuesday, NIO jumped 17.5%, Li Auto was up 8.2%, and Xpeng Motors increased 11.3%. Additionally, a recent report emerged yesterday which stated that NIO plans to carry a secondary listing on the Hong Kong stock exchange. Read more about the company’s secondary listings here.
The price cuts Tesla made to its vehicles and the launch of the Model Y helped the company dominate the Chinese market. Additionally, the sector is growing rapidly in the country with sales of EV’s expected to increase from 4.5% in 2020 to 10% by 2022.
These sales figures have impressed Tesla bulls as the company is likely going to make good on Elon Musk’s promise to deliver 200,000 units in China this year. Tesla has also been successful in manufacturing efforts even with the global chip shortages that interrupted the company’s production.
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Content Writer at MyWallSt
Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.