Tesla and AMD shoot up Wall Street, gold rises with them

The US equity markets are firmly in the upside on Tuesday afternoon, with technology companies in particular as big winners. Tesla and chip manufacturer AMD attract attention with substantial price increases, while the gold price also suddenly skyrockets.

Investors are reacting to positive developments around artificial intelligence (AI), better than expected economic figures and new expectations about US interest rates.

The Nasdaq rises 1.07 percent to 26,450 points, while the S&P 500 gains about 0.60 percent. The Dow Jones is clearly lagging with a small rise of 0.10 percent. Technology stocks in particular are benefiting from the positive sentiment.

Tesla shares are among the most notable risers on Wall Street on Tuesday. Around 4:26 pm Dutch time, the Tesla price is at 404 dollars, a gain of 3.49 percent. With this, Elon Musk's company continues Monday's strong increase.

The main reason is a positive opinion from the British investment bank Barclays. Analyst Dan Levy increased his advice for Tesla from ‘Equal Weight’ to ‘Overweight’. His target price also went up from $370 to $450.

That means that Barclays still sees about eleven percent room for increase from the current level.

The bank points to various developments that could make Tesla more attractive to investors. For example, there are expectations about a possible merger of Tesla and space company SpaceX. Both companies would have formed special committees to investigate the possibilities. There is no definitive agreement.

In addition, optimism about Tesla's self-driving technology is growing. Latvia recently approved the use of Full Self-Driving (FSD), making it the tenth EU member state to adopt the technology.

The sentiment among analysts is also remarkably positive. The share now has the lowest percentage of sales advice in about eleven years.

Chip manufacturer Advanced Micro Devices (AMD) is also experiencing an excellent trade fair day. The share rises by 4.65 percent to $555. This makes AMD one of the biggest winners among the major American technology companies.

The increase comes at a time when investors are again showing massive interest in companies that benefit from artificial intelligence.

An important reason is the upcoming IPO of AI company Anthropic. The news is generating renewed enthusiasm for the sector and is giving chip companies in particular a strong boost.

The PHLX Semiconductor Index, which tracks major US chip companies, rises by about 2.7 percent on Tuesday. Since the beginning of the week, the profit has been more than five percent.

Other technology companies are also benefiting. Micron Technology is gaining more than two percent, while Oracle is up about 3.3 percent. Intel is also more than three percent higher.

Nevertheless, there are also reservations about the sharp rise in AMD. The company competes directly with Nvidia, but is priced significantly more expensive based on expected profits.

Analyst Keithen Drury of The Motley Fool points out that, despite its much larger size, Nvidia is currently growing faster. According to him, this makes Nvidia more attractive in the longer term, despite the enthusiasm around AMD.

Not only stocks benefit from the positive mood on Tuesday. The gold price is also making a striking move.

After a previous drop to about $3,989 per troy ounce, the gold price skyrocketed Tuesday afternoon. Around 4:26 pm Dutch time, gold stands at about 4,057 dollars, just below the highest level of the day of 4,059 dollars.

The increase follows new figures on US consumer confidence.

Research organisation The Conference Board announced on Tuesday that the confidence index rose to 91.7 points in October. That is considerably better than the 81 points that economists had expected. In September, the index was still at 84.2 points.

American consumers have thus become more optimistic about the economy, despite persistently high inflation and energy prices.

Still, worries remain. Inflation expectations for the next twelve months are still at 5.8 percent. Moreover, many Americans expect interest rates to rise further.

This makes the Federal Reserve's upcoming interest rate decision even more important. The US central bank raised interest rates in September to combat inflation and is meeting again this week.

Investors are mainly looking for signals about possible further rate hikes. Higher interest rates can put pressure on technology stocks, as future corporate profits become less attractive as a result. For gold, interest is also important, because the precious metal itself does not yield interest.

Meanwhile, the Dow Jones shows that not all companies benefit from the positive stock market day. Aircraft manufacturer Boeing loses almost ten percent after disappointing quarterly figures. That depresses the index, which is much less dependent on large technology companies than the Nasdaq.