Market Update (March 3)

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Written By: Nayan Bandaru, Junior Analyst, Technology


The Bears are out of Hibernation

Markets close red with rotations out of large-cap and tech 

The NASDAQ fell by 2.7 percent today marking the largest 2-day drop for the index since September 8th. This is due to the fact that investors are moving away from growth stocks which are essentially tech stocks (Tsla, Sq, Roku) in the current market, to value stocks that investors feel are currently undervalued. The ARK Etf which has been flying due to large investments in Tesla has fallen around 20% since its peak in late February in response to the market rotation. Despite all this, analysts believe that the current bear market is just a small correction in the overall larger bull market that has not ended. They base this claim around data from past bull markets and how much the market rose in response to them and their durations. The average bull market since 1957 for the S&P 500 has lasted 5.8 years and resulted in a 179% price change. The current bull market has lasted for only 11 months and resulted in a 79% price change. Analysts believe that the bull market will continue to follow the historical trend and still rise despite the small hiccup. The circumstances around the bull market this time around are different from past ones and there is still a cloud of uncertainty around the future. The economy should stay strong as vaccines begin to roll out in larger quantities but larger cap and growth stocks may take a hit as vaccines help out the smaller industries that took a large hit during covid-19.


SN10 Lands, Then blows up

The SpaceX prototype decided to blow after landing 

SN10 is the third iteration of Elon Musk’s Mars spaceship and took flight later in the day on March 3. It took off from the southern tip of Texas and flew a little over 6 miles before returning to land. Initially, the spaceship descended horizontally, making many people assume that the landing would be a failure once again. However, SN10 ended up turning itself upright right before it landed on the pad. All seemed well with the landing, until about 15 minutes later when the spaceship rose back up into the sky and blew up. Despite the fireworks, Elon was happy with the progress they had made on the landing since the last two spaceships (SN8 and SN 9) blew up upon impact with the landing pad. Elon eventually wants to reach a point where his spaceships are commonplace for the transportation of people and items to mars and the moon. 


Bitcoin when will the run end??

Bitcoin continues to climb yet still has lots of upside

Bitcoin has been a star recently with the crazy volatility it has been seeing and investments from firms in large amounts. This has fueled the price of Bitcoin to rise over 50k. Now people are starting to question how much more upside Bitcoin truly has. Analysts predict that Bitcoin could easily still rise 300% to around 500% within the coming years. This is due to the halving period of Bitcoin. The halving period is essentially when a certain number of Bitcoin has been mined; the amount of Bitcoin which is awarded to miners from that point on is halved in value. It follows Bitcoin’s finite nature as near 19 million of the 21 million Bitcoins available have been mined. Every time that Bitcoin reaches a halving period its price skyrockets hundreds of percent on average. We are only halfway to the next halving period so when Bitcoin reaches that period it could go ballistic, cannonballing it into the hundreds of thousands of dollars per coin. It would be a historical event as Bitcoin becomes more and more integrated within the current digital society and as a value growth asset. 


Global Market Scare

Investors look to Powell over Rising Bond Prices

Global shares take a hit due to the fact that bond prices in the United States are on the rise. The 10 yr treasury rose today to 1.477 rising back to its year high of 1.614 which was set last week based on a strong economic opening outlook from vaccine rollout. This rapid rise was a part of why many global stocks fell in value today as fund managers don’t want to risk the current extreme volatility of the situation. Investors all have their heads toward Jerome Powell to speak upon the issue since he is said to speak at a Wall Street Journal event before the Federal Reserve Policy-making committee reconvenes in the coming weeks. 


Sources 


https://www.marketwatch.com/story/spacex-starship-lands-successfully-then-blows-up-on-landing-pad-01614818969?mod=newsviewer_click

https://www.marketwatch.com/story/why-the-s-p-500s-bull-market-run-probably-is-only-getting-started-11614820819?mod=newsviewer_click

https://www.marketwatch.com/story/cathie-woods-highflying-ark-etf-just-entered-a-bear-marketa-sign-of-the-times-11614809080?mod=home-page

https://www.reuters.com/article/global-markets/global-markets-bond-scares-spook-world-shares-investors-look-to-powell-idUSL2N2L20CO