Tuesday will be tough for tech stocks after a sell-off greeted investors earlier in the week.
The Nasdaq Composite COMP, -2.46% – up 40% over the past 12 months – fell 2.5% on Monday amid concerns that rising bond yields could make these technology stocks look expensive. As so-called “risk-free” returns increase, it becomes more difficult to justify stock valuations that appear high.
The leading technicians on the pre-market are the electric car manufacturer Tesla TSLA (-8.55%),
down 6% after a decline of around 8% on Monday. Our Call of the day comes from Peter Garnry, head of equity strategy at Saxo Bank, who warned clients that Tesla is embroiled in a “risk cluster” involving Bitcoin and Cathie Wood’s ARK investment management firm.
Tesla announced a Bitcoin investment of $ 1.5 billion earlier this month. Coupled with Tesla’s weakness, Bitcoin fell 10% early Tuesday, in part due to criticism from Treasury Secretary Janet Yellen (see below). That crypto decline will “obviously illustrate the volatility of the profits Elon Musk has delivered to Tesla,” Garnry said.
Read: Tesla Bitcoin move already made $ 1 billion, more than 2020 profit from auto sales, analyst estimates
Meanwhile, Tesla is also the largest position among all ARK Invest ETFs that put pressure on the largest fund, the ARK Disruptive Innovation Fund ARKK. Yesterday it lost -5.79% and lost 6%. This is exactly the risk cluster that we were concerned about and wrote about two weeks ago“Said the strategist.
Read: Stocks aren’t in a bubble, but fund manager Cathie Wood says they are
In the Saxo note, which delved deep into the hugely popular actively managed fund holdings, Garnry highlighted ARK’s focus on biotech names that he said could be risky if the market decides to reverse. Tesla stock makes up 6.7% of total assets under management of ARK’s five actively managed ETFs. This is evident from the data that Saxo released two weeks ago.
“This means that a correction in stocks for whatever reason could be higher interest rates or prolonged COVID-19 lockdowns, selling off biotech stocks or Tesla stocks and leading to a deterioration in performance, resulting in a Net outflow of stocks could result in AUM and then the feedback loop has started, ”Garnry said at the time.
Wood, the executive director of ARK Invest and manager of the popular exchange-traded fund ARK Innovation, said last week she was surprised at how quickly companies are adopting Bitcoin and that their “confidence in Tesla has grown”.
Stock futures ES00, -0.38% YM00, + 0.05% NQ00, -1.40% fall, led by technicians, with European stocks SXXP, -0.72% apart from some travel stocks falling. Asian markets had a mixed day 000300, -0.32%.
Oil prices CL00 (+ 0.76%) are rising, while the closely watched return on the 10-year Treasury note TMUBMUSD10Y (1.363%) is around 1.35%.
Treasury Secretary Yellen may have let some steam out of Bitcoin BTCUSD, -12.65%, after repeating some cryptocurrency concerns in an interview with the New York Times Dealbook. Bitcoin most recently fell 13% to $ 47,909, taking a number of other cryptos with it.
All eyes on Federal Reserve Chairman Jerome Powell as he makes a two-day testimony on Capitol Hill. With more than 10 million Americans still out of work, I’m sure Powell will do whatever it takes to rejuvenate himself, and rightly so as I’m afraid to think about what a 2020s tantrum will look like ” said Jeffrey Halley, senior market analyst in the Asia Pacific region. Oanda.
We also receive the latest housing indices from S&P CoreLogic Case-Shiller and the Federal Housing Finance Agency, as well as an update on consumer confidence.
Home Depot HD hardware store shares are falling despite positive results.
Shares in the special purpose vehicle Churchill Capital CCIV, + 8.37%,
Also known as blank check companies, sink in the pre-market. After weeks of rumors, Churchill finally announced a deal to purchase electric vehicle maker Lucid Motors.
President Joe Biden mourned more than 500,000 Americans who had died from COVID-19. Late on Monday he observed a moment of silence and asked the public to “mask” themselves.
Social media group Facebook FB, -0.47%, says it will restore links to news articles in Australia five days after proposed changes to the country’s media law.
“I can blame people for profanity and they have no idea.” Pandemic Positive Editors.
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