Tesla surges on full self-driving trial

Wall Street’s main share index rose Tuesday as the most heavyweight growth stocks and chipmakers increased. Investors looked ahead to financial data in a holiday-shortened week to estimate the Federal Reserve’s policy approach.

Tesla saw a 5.4% increase in its stock price following CEO Elon Musk’s announcement of offering a one-month trial of its Full Self-Driving technology to both existing and new customers in the United States. This move aims to promote the adoption of Tesla’s driver-assist technology.

Semiconductor Index Records Modest Gain

The Philadelphia Semiconductor Index (.SOX) edged 0.3% higher, poised to conclude the quarter with double-digit gains. 

This uptick follows an AI-driven rally that boosted chipmakers. Micron Technology and Marvell Technology were among the top gainers in the sector, with increases of 2.3% and 3.1%, respectively.

Focus on PCE Price Index Data

Investor attention remains on the upcoming release of the Personal Consumption Expenditures Price Index (PCE), scheduled for Friday. 

This index serves as the Federal Reserve’s preferred measure of inflation. Analysts anticipate a 0.4% increase in February and a 2.5% annual rise. 

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Core inflation, excluding volatile food and energy components, is expected to have risen by 0.3% last month, maintaining an annual pace of 2.8%.

Record Highs Following Fed’s Projection

Last week, Wall Street reached new record highs after the Federal Reserve reaffirmed its projection of three interest-rate cuts for the year. 

Fed Chair Powell’s dovish stance contributed to the market’s positive response, with investors interpreting it as a sign of continued accommodative monetary policy.

Ongoing Concerns about Inflation

While Fed officials expressed confidence in the easing of U.S. inflation, they also acknowledged growing caution regarding the ongoing debate. 

Crit Thomas, Global Market Strategist at Touchstone Investments, noted that although Powell’s remarks were relatively dovish, concerns about inflation persist within the market. Fed officials continue to monitor inflationary pressures closely amidst evolving economic conditions.