Tesla's stock experienced a significant decline after the Federal Reserve's latest interest rate outlook dampened investor sentiment. The Fed's decision to cut rates by 25 basis points was anticipated, but the revised forecast for fewer rate cuts next year and higher projected inflation caught investors off guard. This shift in monetary policy expectations led to a broad sell-off in rate-sensitive sectors, with Tesla being one of the hardest-hit stocks. The S&P 500 Consumer Discretionary Sector Index, which includes Tesla, fell 4.6%, highlighting the impact of the Fed's announcement on the market.
Additionally, concerns over Elon Musk's international dealings added to the negative sentiment surrounding Tesla. Reports surfaced about the Air Force Secretary's unease regarding Musk's contacts with Russia, further weighing on investor confidence. These developments compounded the pressure on Tesla's stock, which had already been under scrutiny due to mixed demand trends and potential policy shifts under the Trump administration.
Tesla (TSLA) shares fell 2.03% to $431.19 in after-hours trading, following an 8.28% drop to close at $440.13 on December 18, 2024.