August has been something of a chequered month for the US stock market. The S&P 500 struggled to make gains at the beginning of August, as US-China tension flared up over Taiwan and investors tried to anticipate how high interest rates could rise. Despite a bumpy start, the index enjoyed a spurt of strong momentum in mid-August, after the rate of inflation appeared to be easing and investors wondered whether interest rates may, as a result, rise more slowly than previously thought. The market declined somewhat rapidly toward the end of the month, as the Fed Chairman gave a ‘hawkish’ speech that warned of a ‘sustained period’ of lower growth.
All indicators suggest it is probably too soon to rest on our laurels. Many economists think the Fed could raise interest rates by 50 basis points or more in the coming months. It seems that the question is not whether rates will rise, but how much rates will rise by. This has not dampened the spirits of bullish directors that have been investing in US shares. Warren Buffett and Bill Gates have both increased their stakes in US companies, not in Berkshire Hathaway or Microsoft, but in other firms that meet their investment criteria. Elon Musk has also been trading US shares. He has been selling stock in Tesla, but does this mean he is bearish about his own company? Let’s take a closer look…
Elon Musk sells Tesla shares
The electric-car maker, Tesla, has been bolting along in the fast lane. The firm has boosted revenues, profits and cashflows in recent years. We can also see from the chart below that Tesla has consistently been ahead of the S&P 500. According to the StockRank Style system, Tesla is a ‘high flyer’ – a profitable, cash-generative stock with strong price momentum that broker-analysts are optimistic about. Nevertheless, on 9 August 2022, Elon Musk sold 7.9m Tesla shares. Does this mean Musk is bearish? Maybe not…
Musk may need the money to buy Twitter if he is forced to complete the takeover that he proposed in April, but has opposed since July, when he accused Twitter of withholding information about fake accounts. If the takeover does not happen, Musk has said he would buy Tesla shares again. He still owes around 15% of the firm.
