Wall Street Mixed at Open as Tesla, Lucid Fall Under SEC Pressure; Dow up 440 Pts

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Wall Street Mixed at Open as Tesla, Lucid Fall Under SEC Pressure; Dow up 440 Pts
Credit: © Reuters.

By Geoffrey Smith 

Investing.com -- U.S. stock markets opened mixed on Monday, with broad gains in industrials and reopening plays offset by sharp falls in some of the market's hottest tech stocks. 

By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was up 442 points, or 1.3%, at 35,022 points. The Dow was lifted by commentary over the weekend from Dr. Anthony Fauci, President Joe Biden's chief medical adviser, that the new Omicron variant of Covid-19, appeared to be less virulent than feared. However, the Nasdaq Composite was down 0.5% and the S&P 500 was up only 0.5% 

Tesla (NASDAQ: TSLA ) stock fell 2.5% and Lucid Motors stock fell 6.8% in early trading after both companies ran afoul of the Securities and Exchange Commission. The SEC is looking into whistleblower claims about defective solar panels made by Tesla's Solar City unit, while Lucid is under investigation for the way it presented itself to investors before merging with a special purpose acquisition company earlier this year - a deal in which investors pumped $4.4 billion into the company at a valuation of around $24 billion. That valuation is now at $67 billion, even after the morning plunge.

Tesla stock, for its part, has been under pressure in recent weeks from repeated block sales by CEO Elon Musk. That pressure has been compounded by continued outflows from the ARK Innovation ETF (NYSE: ARKK ) of investment guru Cathie Wood. Tesla is one of ARK's signature holdings of long-duration investments that aim to plug into the megatrends of coming years. ARK's suite of funds has seen outflows of over $2 billion in the last month. ARK Innovation fell below $100 for the first time since October 2020 last week as the outflows continued.

Another favorite stock of the year, chipmaker Nvidia (NASDAQ: NVDA ), fell 13.8% to its lowest in a month, as its intended takeover of chip designer ARM ran into ever stronger opposition from global regulators. Already the subject of a national security review in the U.K., the deal is now the subject of a lawsuit from the Federal Trade Commission aiming to stop it on antitrust grounds. 

Elsewhere, vaccine stocks suffered heavy outflows again, as hopes rose that the Omicron variant of Covid-19 will hasten the end of the pandemic. Omicron has displaced Delta, which has accounted for around two-thirds of the 5.26 million identified casualties from Covid-19, as the dominant strain of the disease in the parts of South Africa where it has been discovered. Early data from South Africa suggest that it has tended to cause milder illness than Delta. That may create an environment where natural immunity against the disease can spread quickly without health systems being overwhelmed by a fresh surge of cases. 

Moderna (NASDAQ: MRNA ) stock fell 11.4%, while BioNTech (NASDAQ: BNTX ) stock fell 12.7% and its partner Pfizer 's (NYSE: PFE ) stock fell by 2.6%. Both vaccine makers and chipmaking stocks had been big beneficiaries of the first news of Omicron's spread last week. 

 

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