Tuesday is becoming difficult for technology stocks after a wave of sales greeted investors earlier in the week.
The Nasdaq Composite COMP,
– 40% rise in the past 12 months – plunged 2.5% on Monday due to fears that rising bond yields could make these tech stocks look expensive. When so-called “risk-free” earnings are rising, it is much more difficult to justify stock valuations that appear high.
The lowest leading technologies in the pre-market are electric car maker Tesla TSLA,
down 6% after falling about 8% on Monday. Our call of the day comes from Saxo Bank’s head of stock strategy, Peter Garnry, who has warned customers that Tesla is entangled in a “risk group” involving bitcoin and Cathie Wood’s ARK Investment Management company.
Tesla announced a $ 1.5 billion investment in bitcoins earlier this month. Along with Tesla’s weakness, bitcoin fell 10% on Tuesday, which some attributed to criticisms from Treasury Secretary Janet Yellen (see below). This drop in cryptography “will obviously illustrate the volatility of profits that Elon Musk delivered to Tesla,” said Garnry.
Reading: Tesla’s bitcoin strategy has already made $ 1 billion, more than 2020 profit from car sales, analyst estimates
Meanwhile, Tesla “is also the largest position in all ARK Invest ETFs, which added pressure to its largest fund, the ARK Disruptive Innovation Fund ARKK,
losing 6% yesterday. This is exactly the risk group with which we have been concerned and wrote about two weeks ago”Said the strategist.
Reading: The shares are not in a bubble, but here’s what it is, according to fund manager Cathie Wood
In the note from Saxo who delved deeply into the holdings of the highly popular and actively managed funds, Garnry highlighted ARK’s concentration on biotechnology names that, he said, could be risky if the market decides to reverse. And Tesla’s shares represent 6.7% of total assets under management in ARK’s five actively managed ETFs, according to data that Saxo analyzed two weeks ago.
“What this means is that a correction in stocks for any reason, it could be higher interest rates or prolonged blocks of COVID-19, it could trigger sales of biotech stocks or Tesla stocks and cause performance deterioration, which it could start the net flow of AUM and then the feedback loop started, ”said Garnry at the time.
In turn, Wood, chief executive of ARK Invest and manager of the popular stock market fund ARK Innovation, said last week that he was surprised at how quickly companies are adopting bitcoin and that his “confidence in Tesla has grown”.
The markets
ES00 stock futures,
YM00,
NQ00,
are falling, led by technicians, with European SXXP shares,
sinking away from some travel stocks. Asian markets had a mixed day 000300,
CL00 oil prices,
are rising, while the closely observed yield on the 10-year Treasury note TMUBMUSD10Y,
is trading around 1.35%.
The graph
Treasury Secretary Yellen may have vented with bitcoin BTCUSD,
after repeating some concerns about cryptocurrency in an interview for the New York Times Dealbook. Bitcoin fell 13% to $ 47,909, taking a lot of other cryptocurrencies with it.
The buzz
All eyes on Federal Reserve President Jerome Powell, who is starting a two-day testimony on Capitol Hill. With more than 10 million Americans still unemployed, “Mr. Powell will go out of his way, I am sure, to put the gradual reduction to bed and rightly so, as I am afraid to think about what a cholera crisis will look like in the 2020s, ”said Jeffrey Halley, senior market analyst, Asia Pacific , Oanda.
We will also obtain the latest home construction indices from S&P CoreLogic Case-Shiller and the Federal Housing Finance Agency, along with an update on consumer confidence.
Shares of home depot retailer Home Depot HD,
are falling, despite optimistic results.
Shares of the special purpose acquisition company Churchill Capital CCIV,
also known as a blank check company, are sinking in the premarket. After weeks of rumors, Churchill finally announced an agreement to buy electric vehicle company Lucid Motors.
Lamenting the loss of more than 500,000 American lives to COVID-19, President Joe Biden observed a moment of silence on Monday night and asked the public to “disguise themselves”.
Facebook social media group FB,
says it will restore links to news articles in Australia, five days after the proposed changes to the country’s media law.
Random reading
“I can murmur obscenities at people and they have no idea.” Redditors in pandemic positives.
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