Following 10 straight interest rate hikes, the US Federal Reserve overnight confirmed its largely baked-in decision to hit pause on rate increases.

It’s the first time The Fed’s left rates unchanged since January 2022, maintaining its target range for the federal funds rate at 5 to 5.25%.

But getting in ahead of that hotly anticipated moment – and always good for a mid-week “gotcha” – Tesla (TSLA) boss Elon Musk surprised markets earlier on Wednesday by bumping up his prices for the EV maker’s Model Y crossover.

Shares in Tesla advanced almost 3.5% by lunchtime in New York, ahead of the rates decision.

The rise in the sticker price is another welcome step in walking back the even more surprising Tesla price cuts which played a significant role in the erosion of both investor confidence in Musk and TSLA’s share price.

The early reponse suggested the move did initially ease some of those lingering concerns around strategy, margins, and market share.

In the States, the going price for a Tesla Model Y now starts at US$47,740, (that’s pre- the US $7,500 federal tax credit), according to Tesla.

The US$250 step up this week might seem miniscule but there’s method to the incremental madness.

Firstly, the approach of drip feeding the market marginally upbeat news has helped Tesla’s stock recapture some of its former mythic uniqueness.

TSLA is up more than 50% over the last month. That’s incredible even for a company with a stock as elastic as TSLA. In fact the turnaround is surely among Elon’s best ever runs in creating value from nothing.

The gains are easily outpacing the wider market and Tesla is right up there among a handful of tech majors establishing the curious bullish sentiment leading Wall Street every which way but down right now.

And Tesla’s stock is gaining momentum.

Macroeconomics has done its part for the mega growth caps. The mere sniff of easing inflation and a loosening of the vice-like central bank grip on growth have helped the automaker. Still, the Tech Heavy is up a mere 10% while Tesla’s five times that over the last 30 sessions.
 

There and back again: An EV’s tale

After a difficult 12 months, with boss Elon Musk distracted by his new toy, Twitter, and the company cutting prices across its flagship EVs earlier this year, the happy news seems to just keep rolling on.

Tesla gains are easily outpacing the market and contributing to the bullish sentiment across Wall Street.

Wednesday’s abrupt decision to take the initiative on prices is manna from heaven for investors, with the stock following in-step with another small increase after similarly sized bumps to a few models last month — that should signal that the worst of these headwinds are over.

Shares in Tesla advanced 2% in premarket trading on Wednesday. The stock’s record winning streak, up 13 straight days as of Tuesday, looked all but set to continue, until The Fed stepped in.

Tesla stock ended the session 0.7% lower at $256.70, dropping about $5 after the Fed announced it wouldn’t raise short-term interest rates in June.

The central bank’s newest projections imply Chair J. Powell and his FOMC team plan to get back to the business of rate raising later this year. It’s a pause, not a halt, is the watchword on Wall St and Powell has previously forecast a rate of 5.6% by the end of the year.

If the Fed decided to revert to its more recent 25 basis point increases, the forecast suggests the central bank still has two .25 calibre bullets to fire off before Xmas.

Tesla did bounce back a little late in the session, but couldn’t retrace amid the splash for cash which the Fed announcement presented.
 

Euro leverage?

Meantime, as this rag reported on Wednesday Sydenham time, France’s Frenchiest President Emmanuel Macron confirmed Elon will be flying into Paris as early as Friday for what Macron thinks will be an earnest discussion about France’s (limited) potential as a home for a gigafactory or deux.

France’s Minister for Commerce, Bruno The Mayor Le Marie has been courting anyone with an EV – including Chinese giant BYD, much to the chagrin of the White House – to pop over and build a few gigafactories in an attempt to ensure the country’s significant auto industry doesn’t miss the er, boat, on the EV transition.

Elon has both better offers and bigger problems in Europe; the most pressing for the Twitter-owner will be looming hardline tech and social media regulation.

So it’d be fair to imagine President Macron coming out hard against the latter is probably France’s only hope of gaining the former.

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