This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
What happened
Tesla's (NASDAQ: TSLA) stock was rising this afternoon after Federal Reserve Chairman Jerome Powell said that smaller interest rate hikes will begin in December.
That news caused market indices to jump -- with the S&P 500 gaining 2.3% and the Nasdaq Composite rising 3.4% -- and they took Tesla's share's along with them.
The electric vehicle stock was up by 5.3% as of 3:34 p.m. EST.
So what
Speaking at the Brookings Institution today, Powell said that the Federal Reserve will likely begin smaller increases to the federal funds rate at its December meeting.
Powell also said that the Fed's moves, including past interest rate hikes, will take time to slow inflation and that "it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down."
Investors were very happy to hear that today, and they specifically latched onto Powell's comments when he said that "The time for moderating the pace of rate increases may come as soon as the December meeting."
Growth stocks like Tesla have been especially vulnerable to the Fed's aggressive interest rate hikes as investors have worried that the Fed will end up pushing the U.S. economy into a recession.
Tesla CEO Elon Musk has been concerned about exactly that and tweeted earlier today, before Powell's comments were published, about the potential for a recession:
Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.
-- Elon Musk (@elonmusk) November 30, 2022
Now what
While the Fed isn't cutting rates like Musk hoped, investors are happy to see that the severity of the increases will at least decrease.
But Powell also warned that the Fed has more work to do. "Despite some promising developments, we have a long way to go in restoring price stability," he said today.
But with central bank officials now indicating that less aggressive interest rate increases could be on the horizon, many growth stock investors are celebrating the news today.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
