Despite facing production headwinds during the second quarter, Tesla delivered better-than-expected output driving the stock market higher on Thursday.

On Thursday, July 21, electric carmaker Tesla Inc (NASDAQ: TSLA) surprised The Street with better-than-expected earnings results. Tesla’s adjusted earnings per share stood at $2.27 against the estimated $1.81. The Q2 results demonstrated by Tesla led to Nasdaq gains.

Tesla also reported a 42% jump year-on-year in the company’s revenue. However, soaring inflation and growing competition among EV companies have been eating into Tesla’s automotive margins. Some analysts applauded Tesla for delivering better output than expected.

Last quarter, the company reported production issues at its gigafactories in Shanghai, Berlin, and Texas. Due to the COVID lockdown, Tesla had to shut down its gigfactory for 22 days in April 2022. As a result, the company had to liquidate 75% of its Bitcoin holdings to build its cash position. Dan Ives and John Katsingris from Wedbush said:

“In a nutshell, the quarter was better than feared with healthy guidance for 2H by Musk & Co. that look achievable with no margin for error”.

On Thursday, the TSLA stock rallied a strong 10% closing at $815 levels. Alike other growth stocks, Tesla has been under major selling pressure this year in 2020. As of Thursday’s close TSLA stock is trading 32% down year-to-date.

Nasdaq Composite Gains 1.36% after the Q2 Results News

The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) gained a strong 1.36% closing above 12,000 levels. The Nasdaq Compostive has already gained over 5% this week and shall be ending the week on a strong note.

Tesla led the gains for Nasdaq, however, other tech stocks are also doing good on a softer dollar. After a severe beating down this year, investors have been regaining interest in tech stocks. Thanks to the strong corporate earnings season. Speaking of the development, Robert Cantwell, portfolio manager at Upholdings said:

“What you’re seeing in the market today is continued potential recovery, some continued potential optimism for numbers not being as bad as feared. But that’s been happening in the market now for almost a month.”

On Thursday, the European Central Bank announced a surprising 50 basis points interest rate hike for the first time in 11 years. This led to the USD losing strength. A tweaking dollar could boost the shares of the tech companies as a large part of them get their revenue outside of America.

However, some investors still prefer to remain cautious concerning weak economic reports and soaring inflationary pressure. Huw Roberts, head of analytics at Quant Insight said:

“If overall financial conditions keep tightening on the current path, then that means that macro fair value for US equities will continue to trend lower”.

Along with Nasdaq, the S&P 500 gained 1% on Thursday closing just under 4,000. Similarly, the blue-chip index Dow Jones gained 0.5% closing at 32,036.90.

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