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Today in the Market (12/5/2022)

Good Evening. Monday saw a decline in U.S. stock prices as investors analyzed the first economic data releases in a week full of announcements and pondered the implications of recent data for future Federal Reserve policies.

The S&P 500 dropped 1.79%, while the Dow Jones lost 1.40%. The Nasdaq Composite plummeted 1.93%.

A NEW MILESTONE

According to Tesla (TSLA) China through the news agency Xinhua, the carmaker delivered 100,291 EVs from its Giga Shanghai production in November, setting a new milestone and marking the first time it has surpassed 100,000 deliveries.

However, the increase in production may have been too fruitful for Tesla, at least in the near term. Bloomberg and Reuters both report that Tesla will now reduce output at Giga Shanghai, indicating that regional demand may be declining.

It is said that Tesla may begin production cutbacks as early as this week, with reductions from total capacity believed to be approximately 20%.  October and November saw Giga Shanghai operating at full capacity.

However… Even if Tesla decreases output by 20%, the plant would be generating roughly 80,000 units a month, meaning it could potentially reach around 1 million cars manufactured, making it the most productive EV facility in the world.

OIL PRICES DROP

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As global stock markets tumbled and risk-averse investors reduced crude bets before the end of the year, oil prices dropped the highest in over two weeks.

What are the possible reasons causing this drop?

  • West Texas Intermediate futures dropped 3.8% to end the day below $77 when US economic statistics came in stronger than anticipated.
  • Rumors also emerged when the Federal Reserve said it would maintain its restrictive stance to combat inflation, pushing a gauge of the US currency higher.
  • Also, the European Union and the Group of Seven started enforcing a $60 per barrel restriction on Russia’s petroleum exports.

What does this mean going forward? With the sanctions’ long-term effect and the likelihood that shipping and insurance limitations may impede flows, which are yet unknown; Traders are cautious and are waiting for further information before making decisions. These events have already caused some ships to get stranded near Turkey, however, they have not caused significant disruption.

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