US stock markets plunged this week following a month of steady gains. The news was not bad for all though as Tesla shares bucked the trend reaching a record high.
Major indexes in the US have been performing well since their massive crash in March. The S&P 500, for example, had recovered over 40% hitting a three month high of over 3200 points this week.
Stock market pullback
Things turned south on Thursday, however, as the index shed over 6% in a dump which took it below 3000 points. The Dow Jones Industrial Average fell almost 7%, or nearly 1,900 points, in its worst single-day drop since the Covid-19 sell-off in March.
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Rising concerns over a second wave of Covid-19 infections, as several states relax lockdown measures, has been the catalyst for the stock selloff.
A grim economic update from the US central bank added to the sentiment as the FED forecast a long recovery this week. Unemployment is set to remain high for years and interest rates are likely to remain near zero until at least 2022.
Investors have started dumping stocks as the hopes of a quick economic recovery dwindle. According to reports, the stock market’s fear gauge, the CBOE Volatility Index, surged above 47% on Thursday.
With markets heavily in over-bought territory, and the economy still in crisis, a major correction is inevitable and Friday may see further losses.
Tesla bucks the trend
The news was not all bad for everyone, however. Tesla stock has bucked the trend and posted its highest-ever stock price, which topped $1,000 for the first time ever on Wednesday.
CEO Elon Musk simply tweeted ‘lol’ as his company stock skyrocketed.
The move has been largely attributed to Musk’s announcement that the firm plans to push forward with the development of commercial trucks.
Tesla had a market capitalization of $190 billion at the close of trading on Wednesday, making it the second-largest automaker by value globally. Its market cap even exceeded that of Bitcoin, which is has currently retreated to $170 billion following a 6% slide for the world’s top digital asset.
Forbes attributed the stock surge to increased demand for Tesla vehicles. It added that the high levels of consumer demand seen over the past few quarters may just be starting to make its way into new orders and company sales numbers.
This would give investors enough confidence in revenue projections over the next year or two to continue buying the stock into new highs.
Tesla shares had pulled back slightly by the close on Thursday and were trading just above $970 according to Nasdaq.