Shares of Tesla surged 20 per cent on Tuesday to cross the $900-mark, extending a stunning rally that has more than doubled the company’s market value since the start of the year as more investors bet on Chief Executive Elon Musk's vision.
The latest surge was partly fuelled by Panasonic saying on Monday its automotive battery venture with Tesla was in the black for the first time. Some analysts have attributed the rally to short covering as well. Short interest in Tesla stood at 13.8 per cent as of Jan 30, according to Refinitiv data.
Shares of heavily shorted firms can at times get pushed higher as traders rush to buy stock to cover their short bets, triggering what is known as a “short squeeze”. Panasonic shares closed up 10 per cent, while those of Tesla's Asian suppliers South Korea's LG Chem and China's CATL also closed higher.
US stocks jump
Gains in technology heavyweights helped Wall Street’s main indexes climb for the second day on Tuesday, with fresh intervention by China's central bank calming investor nerves. China injected 1.7 trillion yuan ($242.74 billion) via reverse repos on Monday and Tuesday, helping Chinese stocks reverse some losses and lifting the world equity index . The stimulus boosted investor sentiment even as several economists cut their forecasts for 2020 global growth as the fast-spreading virus has hampered business operations in the world's second largest economy.
“Investors seem to be reacting positively to the steps currently being taken by Chinese authorities,” said Art Hogan, chief market strategist at National Securities in New York.
Nine of the 11 major S&P sectors were higher, led by a 1.7 per cent rise in energy stocks as oil prices rebounded.