Key Highlights

● Tesla traded at about $378.79, lifted partly by speculation about a Merger with SpaceX.

● Polymarket bettors now favor an official merger announcement by Dec. 31, 2027, though no deal has been announced.

● Morgan Stanley downgraded auto dealers AutoNation and Group 1 Automotive the same day, citing higher rates.

Tesla rose on Monday, Oct. 5, as prediction-market bettors leaned toward a Tesla and SpaceX merger and Elon Musk's chip ambitions kept the stock buzzing on the Nasdaq-100.

Merger bets in the spotlight

Tesla (NASDAQ:TSLA) rose on the Nasdaq-100 on Monday, trading at about $378.79. Part of the gain was tied to speculation about a merger between Tesla and SpaceX (NASDAQ:SPCX), another Elon Musk company.

That speculation has spilled into prediction markets. On Polymarket, bettors now favor an official merger announcement by Dec. 31, 2027. Prediction markets reflect wagers by traders, not company plans, and no deal has been announced.

Musk has been careful in public. "Obviously, we can't talk about combining companies," he said, adding that it "got to be done with the appropriate process."

Television host Jim Cramer has weighed in too, saying "there is nothing stopping" Musk from merging the two.

Other drivers

Tesla's third-quarter deliveries of 486,000 vehicles, ahead of the roughly 462,000 that analysts expected, were also cited as context. However, those figures came out before Monday, so they were not fresh news on the day.

Tesla reportedly rose overnight after Musk's comments on Terafab, his Texas chip-manufacturing venture. Musk confirmed early talks with Taiwan Semiconductor Manufacturing (NYSE:TSM) about joining the project, which is meant to Supply Tesla, SpaceX and xAI.

"Just discussions, but something may come of it," Musk said.

SpaceX shares also jumped on Monday. Morgan Stanley analyst Adam Jonas reiterated his Overweight rating with a $300 price target. Intel (NASDAQ:INTC) fell on fears it could lose its exclusive manufacturing role at Terafab, while TSMC's US-listed shares rose.

Records on the Nasdaq

The broader market was strong. The Nasdaq-100 closed at a record 31,076.44, and the Nasdaq Composite jumped 286.45 points to a record 27,477.31. The S&P 500 added 51.23 points to 7,773.95, just shy of its summer record. The Dow rose 90.94 points to 51,267.90.

Mega-cap AI names led, with Nvidia (NASDAQ:NVDA) closing at a record. That came despite the 10-year Treasury Yield climbing to its highest level since 2002 after the ISM services prices-paid index hit 74.0, the highest since July 2022.

Friday's weak September jobs report, with payrolls up just 29,000, cut bets on an October Fed hike to roughly one in four or less.

Autos and rates

Rising rates are a headwind for car buyers who finance their purchases. Morgan Stanley downgraded auto dealers AutoNation (NYSE:AN) and Group 1 Automotive (NYSE:GPI) on Monday, citing higher interest rates and oil prices among other factors for AutoNation.

Oil fell on the day, with Brent settling at $100.32 a barrel and US crude at about $89.43, even as the Strait of Hormuz remained effectively closed.

Tesla's rise added to a broad tech-led advance. Even so, the stock remains down for the year. Cramer's comment and the betting odds are opinions and wagers, not company guidance.

SpaceX's own climb, helped by a reiterated $300 target from Morgan Stanley's Adam Jonas, kept the Musk ecosystem front and center for traders all day.

What to watch

Merger chatter will likely keep Tesla in the headlines, but any combination would need formal steps, and none has been announced. Investors will also watch the TSMC and Terafab talks.

Tesla's next Quarterly Report will bring updates on margins and demand. On the macro side, minutes from the Fed's September meeting are due Wednesday, Oct. 7 at 2 p.m. ET, and the Fed meets again Oct. 27 to 28.