When the opening bells sounded on Wall Street this morning, investors braced for the worst. Historically, when the U.S. Federal Reserve has hiked interest rates, stocks have suffered. Today has seen a different outcome take shape for some, however; markets rallied in the face of the year’s first rate hike. Many names spent the day rising, including Tesla (NASDAQ:TSLA) stock.
In fact, the well-known electric vehicle (EV) leader began the day by rising. With only a slight dip, TSLA stock spent the afternoon moving upward. As of this writing, shares are up around 3.7% for the day. This strong performance has helped pull Tesla out of the red for the week.
Like Tesla, many other top stocks are in the green today as well. These include Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG, GOOGL). So, without further ado, let’s take an in-depth look at the forces driving stocks up today.
What’s Happening with TSLA Stock
First off, it should be noted that TSLA stock is likely being impacted by a company-specific catalyst today. Yesterday, a report surfaced that the company is “actively cooperating” with China’s government to keep production flowing at its Shanghai gigafactory. This comes after Tesla was forced to pause production for two days due to new Covid-19 restrictions.
Regarding the broader market, it’s also clear that investors have largely disregarded the conventional wisdom that higher interest rates are a reason to be bearish. This school of thought usually makes sense. Fed rate hikes mean a higher cost to borrow for both companies and consumers, thereby creating market turbulence. However, this time around, investors remained bullish and the S&P 500 and Nasdaq Composite stayed in the green.
As an industry leader, investors also often look to Tesla when trying to determine the strength of the EV sector on any given day. Most peers follow TSLA stock when momentum is high. Today has been no different. Lucid (NASDAQ:LCID) — a company that has taken plenty of heat recently — actually outperformed Tesla. Fellow EV startup Rivian (NASDAQ:RIVN) traded in the green as well after a difficult month. This trend should remind investors that market momentum is high.
What It Means
It can’t be said for sure how long this rally will continue. However, the strength seen from markets today should help some investors relax. The Fed has promised six more interest rate hikes before the end of 2022. This wasn’t received well on Wall Street when it was first announced, but many investors are likely feeling better after today.
Today, bucking conventional wisdom paid off for investors. What’s more, the momentum generated by this bullish energy across sectors could certainly carry into the months ahead as Wall Street prepares for further hikes. TSLA stock will likely continue to win — and it won’t be the only one.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.