Major benchmarks were mixed on Thursday morning as investors tried to assess the state of the economy. Most market participants are looking for guidance from Jackson Hole, Wyoming, on Friday, where Federal Reserve Chair Jerome Powell is set to speak at the central bank's annual conference. As of 10:30 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 49 points to 26,252. The S&P 500 (SNPINDEX:^SPX) fell 3 points to 2,921, and the Nasdaq Composite (NASDAQINDEX:^COMP) lost 31 points to 7,989.
Tesla (NASDAQ:TSLA) has made the news several times in recent weeks, and the latest involved rumors of a potential investment by German automobile manufacturers in the U.S. electric vehicle specialist. Meanwhile, earnings season for popular retail companies continued, and Victoria's Secret parent L Brands (NYSE:LB) saw its stock fall following its latest report.
Does Volkswagen want a stake in Tesla?
Shares of Tesla were up a fraction of a percent Thursday morning following reports that the electric vehicle company had gained interest from German automakers looking to make an investment. The report in a German publication named Volkswagen (OTC:VLKA.Y), BMW, and Mercedes-Benz parent Daimler as potential buyers.
However, some immediately called the report into question. A statement from Volkswagen denied the rumors, saying that they were "without merit." Yet even the publication itself acknowledged that Volkswagen's ownership structure could create impediments to an investment. With two major families being major stakeholders in Volkswagen, VW CEO Herbert Diess would need to get their permission to make a significant Tesla purchase.
Tesla has seen its stock fall dramatically on various concerns about its operational sustainability, but few dispute the value of the electric automaker's intellectual property and technology. Those assets make Tesla potentially valuable to car companies like VW, especially as interest in electric vehicles has been on the rise worldwide.
It'll be interesting to see whether the rumors surrounding Tesla amount to anything. With Walmart having sued the automaker earlier this week over solar panels the retailer believes haven't performed to specification, Tesla shareholders could use the vote of confidence that an outside automaker taking a significant stake would give them.
L Brands expects a weak fall season
Meanwhile, L Brands saw its stock drop 8%. The parent company of lingerie giant Victoria's Secret and personal care retailer Bath & Body Works wasn't able to deliver the second-quarter financial results that investors were hoping to see.
L Brands saw its revenue fall almost 3% from year-ago levels, sending adjusted net income down by nearly a third. Comparable sales were down 1% companywide. Most of the downward pressure came from Victoria's Secret, which saw a 9% drop in store-based comps and a 6% decline even factoring in direct-to-consumer sales.
Victoria's Secret used to have a commanding presence in the lingerie and sleepwear category. That's started to change lately, as competitors like Abercrombie & Fitch have pressed to build their own brands in the sleepwear space and appeal to their own shopper demographic.
The silver lining for L Brands is that Bath & Body Works saw solid gains, including an 8% jump in overall comps. However, with the care products retailer bringing in significantly less revenue than Victoria's Secret, L Brands will have to find a way to get its entire business contributing toward growth in order to reassure nervous shareholders.