Thursday morning was good for stock market investors following news from China that it would not immediately retaliate further against the most recently announced tariff increases by the U.S. government on Chinese goods. After having seen trade relations deteriorate significantly over the past week, market participants were pleased at the prospects for at least a brief pause in escalation. As of 11 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 250 points to 26,286. The S&P 500 (SNPINDEX:^SPX) gained 29 points to 2,917, and the Nasdaq Composite (NASDAQINDEX:^COMP) climbed 102 points to 7,959.
Electric vehicle pioneer Tesla (NASDAQ:TSLA) made news late yesterday when it said it would offer auto insurance to its owners, but the reception the offering got wasn't unanimously positive. Meanwhile, Dollar General (NYSE:DG) reported financial results that gave those fearing a possible recession some hope for their portfolios.
Will Tesla's insurance really be cheaper?
Shares of Tesla gained 2% Thursday morning on the heels of Wednesday afternoon's announcement from the electric vehicle maker that it had launched Tesla Insurance. The company billed the product as "a competitively priced insurance offering designed to provide Tesla owners with up to 20% lower rates, and in some cases as much as 30%." Insurance will be available only in California at first, with plans to add other states later.
Tesla's announcement argues that the automaker is in a better position to offer insurance at lower cost. In particular, the company pointed to "the benefits of Tesla's active safety and advanced driver assistance features that come standard on all new Tesla vehicles" in helping support lower premiums than mainstream insurance companies offer.
However, several Tesla owners got quotes for the product and then took to Twitter to let the company know what they found out. Many reported that their Tesla Insurance quotes were significantly higher than what they were currently paying. Others pointed out that with the company offering insurance only on Tesla vehicles, families with other cars would have to have two separate policies to get complete coverage.
Tesla responded by making some updates to the insurance product. Nevertheless, it'll take a while before investors can see whether the company will meet its goal of lower costs for its drivers.
Dollar General stays strong
Dollar General saw its stock climb 9% after the dollar store giant reported favorable results for the second quarter. Revenue increased 8% on a 4% rise in same-store sales, and adjusted earnings were higher by almost 15% compared to the year-earlier period.
CEO Todd Vasos pointed to a number of factors supporting Dollar General. "Our results this quarter were fueled by solid execution across many fronts," Vasos said, "including category management, merchandise innovation, store operations, and continued progress with our strategic initiatives." The CEO also pointed to cost control in helping bolster its bottom line.
Dollar General also boosted its guidance. The dollar store retailer now sees revenue rising 8% on same-store sales growth of around 3% to 3.5%, up from previous projections of 7% and 2.5%, respectively.
Dollar stores have performed extremely well during past periods of economic stress as shoppers moved down from higher-end department stores looking for bargains. That could happen in the next recession as well, and investors like the defensive characteristics that Dollar General's stock could have in that event.