Tesla is halting production at its Shanghai plant for a couple of days. It isn’t because of parts shortages. Tesla shares were rising anyway because investors have other things on their minds.
Reuters reported Wednesday that Tesla (ticker: TSLA) will pause production in China for a couple of days amid a rise of Covid-variant infections. Reuters referred to an internal Tesla notice. The company didn’t immediately respond to a request for comment about the report.
Production delays and Covid infections are both bad things, but Tesla stock was up 4.78% on Wednesday. A broader stock market rally is overwhelming the Chinese news. The S&P 500 and Dow Jones Industrial Average were up 1.7% and 1.2%, respectively.
Investors appear pleased that talks between Russia and Ukraine are making progress. Ukraine President Volodymyr Zelensky indicated Russian demands are getting “more realistic.” The two sides spoke Tuesday and were scheduled to speak again Wednesday.
There is other good news investors are focusing on, too. Chinese officials committed to supporting its economy. That has sent shares of NIO (NIO) and other Chinese EV makers up by double-digit percentages.
Oil is down again, a little, and has dropped more than 22% from its March 8 close of more than $123 a barrel. And interest rates are steady ahead of the Federal Reserve’s announcement of its next move on monetary policy, scheduled for Wednesday afternoon. Investors are expecting a 0.25 percentage-point increase in short-term rates.
The focus on better news is a relief to Tesla investors. Coming into the week, Tesla stock had dropped almost 11% from March 10 to March 14 as investors worried that raw-material inflation would begin to crimp profits.
Higher raw material prices are an issue for the auto maker. A basket of metals that goes into EV batteries has jumped about 70% year to date.
Lower output could become an issue for Tesla if production delays persist. Wall Street expects Tesla to deliver about 320,000 vehicles in the first quarter, up from about 309,000 in the fourth quarter of 2021. The delivery numbers are due to be reported in the first couple of day of April.
Coming into Wednesday trading, Tesla stock had declined 24% year to date and was down about 36% from its 52-week high of more than $1,243 a share, reached in November.
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