Key Highlights

● Tesla closed around $378.79, lifted by a cluster of Musk-related headlines rather than a single company announcement.

● Prediction-market bettors now favor an official Tesla-SpaceX Merger announcement by Dec. 31, 2027, though nothing has been confirmed.

● Musk confirmed early talks with TSMC about joining Terafab, his Texas chip venture.

Tesla rose on Monday as talk of a tie-up with SpaceX and Elon Musk's comments on chip talks with TSMC kept the electric-car maker in the spotlight.

Tesla climbs as Musk-related headlines pile up

Tesla (NASDAQ:TSLA) rose on Monday, Oct. 5, closing around $378.79. The gain put the electric-car maker among the steady risers on the S&P 500, which added 51.23 points to finish at 7,773.95, just shy of its summer record.

There was no single company announcement behind the move. Instead, a cluster of Musk-related headlines kept traders busy, linked in part to Tesla's third-quarter deliveries of 486,000 vehicles, ahead of the roughly 462,000 analysts had expected, and to fresh speculation about a merger between Tesla and SpaceX (NASDAQ:SPCX). The delivery figures were released before Monday's session, so they were not new news on the day.

Merger chatter and Terafab talks

The merger talk has been building. Bettors on the prediction market Polymarket now favor an official Tesla-SpaceX merger announcement by Dec. 31, 2027. Nothing has been announced, and the companies have not said a deal is coming.

Musk himself has been careful. "Obviously, we can't talk about combining companies," he said, adding that any such step "got to be done with the appropriate process." Jim Cramer took a bolder view, saying "there is nothing stopping" Musk from merging the two.

The second thread was chips. Musk confirmed early talks with Taiwan Semiconductor (NYSE:TSM) about joining Terafab, his Texas chip-manufacturing venture that would Supply Tesla, SpaceX and xAI. "Just discussions, but something may come of it," Musk said. Tesla shares rose overnight on those comments.

The Terafab news rippled across the chip sector. Intel (NASDAQ:INTC), which joined Terafab in April as its sole Manufacturing partner, fell as investors worried about losing that exclusive role. TSMC's US-listed shares climbed toward record highs. SpaceX rallied after Morgan Stanley's Adam Jonas reiterated his Overweight rating and $300 target.

A record day for the Nasdaq

Tesla had plenty of company. The Nasdaq Composite climbed 286.45 points to a record close of 27,477.31, and the Nasdaq-100 also set a record at 31,076.44. The Dow Jones Industrial Average added 90.94 points to 51,267.90.

Big technology names did the heavy lifting. Nvidia (NASDAQ:NVDA) hit a record and Microsoft (NASDAQ:MSFT) rose after an analyst upgrade. That strength came despite rising borrowing costs: the 10-year Treasury Yield climbed to its highest close since 2002.

Daniela Hathorn of Capital.com summed up the tension: "growth stocks are rallying because Fed expectations have softened, while the Risk-Free Rate against which those valuations are judged remains exceptionally high."

The softer Fed outlook traces back to Friday's jobs report, which showed employers added just 29,000 jobs in September. Traders now see roughly a one-in-four or smaller chance of a Federal Reserve rate hike in October, down from better than even a week ago. Oil also eased, with Brent settling at $100.32 a barrel even as the Strait of Hormuz remains effectively closed.

Despite Monday's gain, Tesla is still lower for the year.

What to watch

The next big macro test arrives on Wednesday, Oct. 7, when the Federal Reserve releases minutes of its September meeting at 2pm ET. The Fed's next policy meeting runs Oct. 27-28. For Tesla, investors will watch for any update on the TSMC talks around Terafab and for further comment from Musk on the SpaceX relationship, as well as the company's next quarterly report. Any official word on a merger would be a major event, but for now it remains market speculation.