S&P 500 secures eighth straight record close, Tesla slumps ahead of expected Musk share dump

  • The S&P 500 clinched an eight successive record close and moved above 4700 for the first time.
  • Tesla shares were down 4.9% after CEO Musk’s poll where he offered to sell 10% of his holdings.

The S&P 500 index managed to clinch an eighth consecutive record close on Monday, ending the session slightly to the north of the 4700 level for the first time after posting a modest gain of about 0.1% for the day. The Nasdaq 100 dropped 0.15%, though remains right at record levels in the 16,300s. The Dow outperformed, rallying 0.3% to move above 36.4K for the first time amid outperformance in industrial and material names; the S&P 500 industrials index was up 0.3%, while the material index was up over 1.0%. These sectors were boosted by the news last Friday that Congress had finally passed the $550B bipartisan infrastructure investment package. Also working in favour of the Dow is the fact that Tesla isnt included in the index, as is the case for the S&P 500, where it accounts for about a 2.5% weighting, and the Nasdaq 100, where it accounts for a more than 5.0% weighting.

Tesla (TSLA) shares dropped 4.9% after CEO Elon Musk held a Twitter poll over the weekend in which he asked his followers whether or not he should sell 10% of his TSLA holding and pledged to abide by the outcome of the poll. 57.9% of the 3.5M poll participants voted in favour of Musk selling shares. Musk owns 23% of Tesla shares and (at last Friday’s closing price) 10% of his stocks would be worth over $20B. Most analysts agreed it was normal for a public announcement of such a large stock sale would way on TSLA in the short run. Many suspected that the sale would do little to impact the value of TSLA shares in the long run, with strong institutional demand ready to lap up the available shares.

US equities remain well supported at/close to record levels for now as a strong Q3 earnings season draws to a close. According to Refinitiv data cited by Reuters, 81% of the 445 S&P 500 companies to report earnings thus far have beaten analyst expectations. Other positives being cited include a more certain outlook for Fed policy now that the Fed’s QE taper timeline has been announced for the rest of the year and a continued fading in the prevalence of the Covid-19 delta variant in the US, which has boosted the growth outlook for Q4.