US stocks closed Friday higher as investors considered fresh inflation data and consumer sentiment along with mixed corporate developments.
Tesla’s shares rose on the back of optimism about its robotics and artificial intelligence expansion. Toyota also issued a recall regarding its Supra models.
While the news was being dominated by geopolitical issues, Donald Trump, president of the United States, signaled that he had made progress on a possible Gaza agreement.
Tesla Shares Rise on AI Optimism Despite European Weakness
Tesla’s shares rose by 3.5% on Friday to $438.51 after analysts increased their price target. This was due to the optimism surrounding artificial intelligence projects at Tesla, its robotaxi launch, and robotics for humans.
Wedbush Analyst Dan Ives raised his Street price target from $500 to $600, while maintaining the Buy rating.
Tesla’s AI expansion in autonomous driving and robots, he said, could drive its value to $3 trillion or even $2 trillion by the end of 2026.
Deutsche Bank has also increased its target from $345 to $435, predicting 461,500 vehicle deliveries in the third quarter, which is ahead of consensus.
Tesla continues to have a difficult time in Europe, as August registrations are down by 23% and the year-to date registrations have fallen 32.6%.
US Consumer Sentiment Slips in September
The final Consumer Sentiment Index of the University of Michigan for September dropped to 55.1, from 58.2 a month earlier. This is a decline of 5.3% on a monthly basis and 21.6% from one year ago.
The Current Conditions Index as well as the Expectations Index both declined, signaling a general consumer discontent with inflation and employment market conditions.
Director Joanne Hsu pointed out that the frustration over high prices is a key driver for the drop. 44% of respondents said inflation was the main factor in their financial situation, which is the largest share of all time.
The sentiment of households that own larger stocks is stable, but the sentiment for those who have smaller stockholdings or none at all has decreased.
Inflation gauge shows limited progress
According to the Commerce Department, core consumer expenditures prices (PCE) rose by 2.9% year-overyear in August. This was in line with what analysts expected.
PCE core gained 0.2% on a monthly base. The PCE Index, which includes food and energy as well, increased by 0.3% over the past month and 2.7% on an annual basis.
These figures show that inflation is down from the highs of 2022, but still above Federal Reserve target 2%.
The data, according to economists, was not surprising but highlighted the difficulty for policymakers in balancing the inflation risk against the labor market’s weakness.
Toyota recalls Supra vehicles due to fire risk
Toyota has announced the recall of approximately 1,500 Supra MY2020-2022 vehicles from the United States because there is a possible defect with the starter motor.
BMW says that water ingress could lead to corrosion and increase the chance of vehicle short-circuits, or, at worst, fires.
Automaker announced that dealers will replace the defective part free of charge. Owners should be informed by the end November.
Trump signals Gaza deal possible
Donald Trump stated on Friday that it “looks like we’ve got a deal in Gaza,” and suggested this could lead to the release of the hostages, as well as “ending the war”.
Trump said, without giving any further details, that “there will be peace” before departing for New York to attend the Ryder Cup.
Benjamin Netanyahu, Israeli prime minister, criticised the West for recognising the Palestinian state. He also called upon Hamas, to free all its hostages.
US Markets Advance on Inflation Data
The equity markets rose following the PCE Report. Dow Jones Industrial Average gained nearly 300 points or 0.6%. S&P 500 added 0.6%. Nasdaq Composite increased 0.4%.
Investor optimism has been tempered due to strong job data, and a revision upward of the second quarter GDP, to 3,8%. This could lessen the pressure for the Fed to reduce rates.
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