By Geoffrey Smith
Investing.com -- U.S. stock markets opened higher on Monday, but the generic supportive factors of stimulus packages and falling Covid-19 cases were put in the shade by the news that Elon Musk's Tesla (NASDAQ:TSLA) had converted $1.5 billion of its cash reserves into Bitcoin.
The move exposes the electric car maker to the fluctuations of an asset whose price is highly volatile and whose utility is still to be proven. However, it also gives the army of enthusiastic retail traders who have supported Tesla's stock thus far another argument to push it even higher in the short term. Bitcoin prices surged some 13.5% to over $43,400 on the news, a new record high, while Tesla (NASDAQ:TSLA) stock opened 2.2% higher. Shares in MicroStrategy (NASDAQ:MSTR), a company that has turned itself effectively into a holding company for Bitcoin, rose 17.8%.
The news of Tesla's move on Bitcoin came on the same day that the electric carmaker was summoned to a meeting with Chinese regulators, who reportedly raised issues of battery fires and unexpected acceleration with the company. Tesla was hit with one of its biggest ever safety recalls last week in the U.S.
By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was 178 points, or 0.6%, at 31,326 points, a new all-time high. The S&P 500 was up 0.5% and the NASDAQ Composite was up 0.6%
The broader market was supported by comments at the weekend from Treasury Secretary Janet Yellen, who said in an interview that it may be possible to get the U.S. back to full employment by the end of 2022. Those comments came after a disappointing official labor market report, which showed that nonfarm employment rose by only 49,000 last month.
Elsewhere, Palantir (NYSE:PLTR) stock rose 12.4% after it announced a new partnership with IBM (NYSE:IBM) on open artificial intelligence applications for business customers.
GameStop and AMC Entertainment. two stocks whose volatility last week attracted the interest of federal regulators among many others, both fell heavily as the momentum behind two extraordinary short squeezes appeared to fade. GameStop (NYSE:GME) stock fell 7.9%, while AMC Entertainment (NYSE:AMC) stock fell 13.9%.
On a day when AstraZeneca (NASDAQ:AZN) was forced to admit the low efficacy of its vaccine against the new South African strain of Covid-19, Moderna (NASDAQ:MRNA) stock rose 4.4% and Novavax (NASDAQ:NVAX) stock rose 6.3%.