Before the Bell: Tesla Drives Nasdaq, Soros Drives Tesla and Buffett Dumps TSMC

Premarket action on Wednesday had the three major U.S. indexes trading lower. The Dow Jones industrials were down 0.25%, the S&P 500 down 0.37% and the Nasdaq 0.45% lower.

Eight of 11 market sectors closed lower Tuesday, with real estate (−1.04%) and consumer staples (−0.93%) posting the day’s biggest losses. Consumer cyclicals (1.18%) and technology (0.44%) had the best gains. The Dow closed down 0.46%, the S&P 500 down 0.06% and the Nasdaq up 0.57%. Two-year Treasuries added eight basis points to close at 4.6%, and 10-year notes rose by five basis points to close at 3.77%. Oil traded flat but was down by about 1.3% early Wednesday morning at $78.01.

Tuesday’s trading volume was slightly below the five-day average. New York Stock Exchange losers outpaced losers by 1,574 to 1,483, while Nasdaq decliners led advancers by about 8 to 7.

The monthly consumer price index (CPI) came in as expected Tuesday, with an increase of 0.5% month over month, and core CPI also met an expected increase of 0.4%. Overall, inflation dropped to 6.4% on a 12-month basis, an improvement of December’s 12-month inflation rate of 6.5%. Core inflation rose 5.6% on a 12-month basis, the smallest annualized gain since December 2021. Inflation has clearly slowed, but the rate of increase still worries traders and, more importantly, the Federal Reserve.

Before markets open on Wednesday, the Bureau of Labor Statistics will report retail sales for January. Economists are expecting an uptick of 2%, stopping the two-month run of declines. The American Petroleum Institute said late Tuesday that the nation’s crude oil inventories increased by 10.51 million barrels last week. Housing starts and the producer price index are due Thursday.

Among S&P 500 stocks, Tesla Inc. (NASDAQ: TSLA) got a share price boost of 7.51% on Tuesday. The company agreed to make available at least 7,500 chargers in its network to non-Tesla vehicles by the end of next year. George Soros’s investment management firm added about 43,000 shares of Tesla stock to its portfolio in the fourth quarter and had call options on 200,000 more.

Defense contractor Leidos Holdings Inc. (NYSE: LDOS) dropped 5.42% Tuesday after reporting fourth-quarter results that exceeded both earnings and revenue estimates. Fiscal 2023 earnings guidance was a bit light, however, and revenue guidance was barely in line with analysts’ consensus estimates. On the company’s conference call, CEO Roger Krone noted concerns about political division over the debt ceiling, and companies like his that are working furiously to get contracts signed before June 5, the date Treasury Secretary Janet Yellen has said would mark the end of the country’s ability to avoid default.

Speaking of billionaires moving markets, Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:
TSM) was hammered Wednesday morning after Berkshire Hathaway Inc. (NYSE: BRK-B) reported the fourth-quarter sale of 86% of its holdings in the company. Buffett and company acquired its position in TSMC only in the third quarter of last year. Uncharacteristically, Berkshire held the stock for just one quarter before dumping most of it. Buffett’s stake in TSMC gained about 18% during the short time that he held it.

Early Wednesday morning, the White House announced a goal of building a network of 500,000 EV charging stations across the country. In addition to Tesla, Hertz Global Holdings Inc. (NASDAQ: HTZ) and BP PLC (NYSE: BP) will build a charging network in major U.S. cities to serve ride-share vehicles and taxis, car rental customers and the public at high-demand locations, such as airports. BP plans to invest $1 billion in EV charging in the United States by 2030. Hertz’s objective is to make one-quarter of its fleet electric by the end of 2024. The White House announcement contains details of other companies that have signed up to expand the country’s EV charging infrastructure.

Recall that Hertz announced in November 2021 that it would purchase 100,000 Teslas in 2022. The company managed to acquire just 48,344 Tesla EVs last year. The company’s total U.S. fleet numbers 428,700 of which 11% are Teslas.

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