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Stock Market Wrap: Tesla Bounces Despite European Slowdown; Hoarders Lift Costco

By Dan Caplinger - Mar 2, 2020 at 4:35PM

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Major market averages finally posted gains after last week's plunge.

The stock market mounted a solid recovery on Monday, regaining a fraction of its massive losses from last week's coronavirus-inspired sell-off. The Dow Jones Industrial Average (^DJI 1.05%) posted its largest point gain of all time, while other major market benchmarks posted similar gains on a percentage basis.

Today's stock market

Index

Percentage Change

Point Change

Dow

 5.09%

 1,294

S&P 500

 4.60%

 136

Nasdaq Composite

 4.49%

 385

Data source: Yahoo! Finance.

Among individual stocks, Tesla (TSLA 1.24%) got back into investors' good graces, with a strong performance even in the wake of a cloudy outlook for its sales prospects in Europe. Meanwhile, Costco Wholesale (COST 1.35%) was a big winner as investors recognized the potential that the warehouse retailer has to meet heightened consumer demand amid concerns that the COVID-19 outbreak might continue to spread.

Mixed sales for Tesla

Shares of Tesla climbed 11% as shareholders regained some confidence in the electric vehicle maker's long-term prospects for growth. The move came despite some signs of weakness in some of Tesla's European markets.

Tesla Roadster in red on pavement in a desert landscape, with sun low on horizon.

Image source: Tesla.

Tesla saw the number of new cars registered in Norway fall from over 1,000 in February 2019 to just 83 last month. Similarly, car registrations in the Netherlands were down by more than two-thirds to 155 cars. February was the second straight month of weakness for Tesla sales in the two countries, which saw year-to-date unit volume fall by more than three-quarters in Norway and more than two-fifths in the Netherlands.

Yet amid fears of saturation in European markets, Tesla remains optimistic about its prospects in North America. The carmaker is reportedly pushing its workers in North America to ensure first-quarter deliveries match up to their numbers in the fourth quarter of 2019, with the goal of getting off to a good start in an effort to hit 500,000 deliveries in 2020.

Tesla stock has been volatile recently, but shares have still climbed considerably year to date even after the recent sell-off. The underlying business will have to keep performing well to justify those share-price gains, but many still believe Tesla's up to the task.

Doing some shopping

Shares of Costco Wholesale also moved sharply higher, rising 10%. Shoppers flooded stores over the weekend to prepare for the possibility of extended home stays if the COVID-19 outbreak within the U.S. worsens.

Wall Street analysts visited Costco locations in the New Jersey area, noting that traffic was higher than usual. In addition, the analysts took pictures featuring several items that were out of stock, showing that customers appear to be stockpiling items like toilet paper, bottled water, and other essentials.

So far, areas in the U.S. haven't been subject to the same quarantines and lockdowns that other parts of the world have seen. Yet given warnings from the Centers for Disease Control and Prevention calling for U.S. residents to prepare for the outbreak, it's not surprising to see customers heading to the warehouse retail giant to meet their needs.

It's unclear whether the increase in traffic will merely pull sales forward from what would've happened in the future or if it'll represent a permanent boost for Costco. Either way, though, the move once again puts the lie to the idea that e-commerce has permanently displaced the need for warehouse retailers.

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Stocks Mentioned

Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
COST
$485.76 (1.35%) $6.48
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$681.79 (1.24%) $8.37
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,097.26 (1.05%) $321.83

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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