Research on the Dynamic Changes in Tesla Stock Price with this turn’s Interest Rate Policy

Abstract

Since the Federal Reserve's action of a series of interest rate increases in response to high inflation, the U.S. equity market as a whole and individual stocks have been under pressure from soft landing and recession concerns, which is reflected in stock prices. In this article, the impact of the Federal Reserve rate increase on Tesla stock returns will be evaluated. The applied VAR model will contribute to the analysis of the dynamic returns of stock returns. The results of the research will present the actual extent of the impact of the rate increase policy on the stock in quantitative terms, as Tesla is one of the top 10 multinational companies in terms of market capitalization has increased the reliability of the data model. The results imply that the Federal Reserve's decision to raise interest rates has an extremely negative impact on stock yields and that this impact diminishes over time. For policymakers, this monetary policy can be effective in the short run effectively suppressing asset prices rather than absorbing more liquidity for their capital markets. For investors, the period of interest rate hikes is not the appropriate time to invest since company profits will be affected by the strength of the local currency which will not meet the expected standards.