U.S. markets traded solidly in the red through the first half of Monday. All three major indexes were down by more than 1.5%, with the energy sector the big loser (down 3.4%) while financials (down 3.2%) and materials (down 3%) were not far behind. The Nasdaq was down about 2.4% in December, while the S&P 500 was up about 1.2% and the Dow Jones industrials were up about 0.6%. It looks like the Santa Claus rally is not on this year.
Crude oil fell to $66.04 a barrel earlier in the morning but later traded above $67 again. Bitcoin also recovered somewhat to rise above $46,000, and the 10-year/two-year Treasury note spread widened to 0.79%, or about one basis point.
Here’s an interesting comment from Sunday’s Financial Times from Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management:
All told, US investors alone poured more than $1tn into equities worldwide in 2021, three times the previous record and more than the prior 20 years combined. After retreating last decade, US households overtook corporations as the main contributors to net demand for equities in 2020. They now own 12 times more stock than hedge funds.
The result is a market that is historically overvalued, over-owned and to a perhaps unprecedented extent, politically flammable. Americans now have an unusually high level of savings and the share of their portfolios that they hold in stocks now matches the all-time high, going back to 1950.
Among equities on our meme stock watch list, just two were trading in the green, and neither of those were up by more than 1%. Cassava Sciences Inc. (NASDAQ: SAVA) dropped by nearly a fifth on no specific news and no elevated chatter level on social media.
Bakkt Holdings Inc. (NYSE: BKKT) traded down by double digits in the noon hour Monday. The company said last Friday that it had acquired a food delivery service that Bakkt will integrate as a payment option that allows customers to pay with cash, points or crypto held in Bakkt’s app.
A semiconductor stock that enjoyed a brief meme-like moment in early June when the share price doubled has merged with a developer of 5G mmWave silicon devices. MoSys shares closed at $4.50 on Friday, and the combined company, Peraso Technologies Inc. (NASDAQ: PRSO), began trading Monday morning. The shares traded lower in the noon hour.
Tesla Inc. (NASDAQ: TSLA) traded down Monday following a recall of 106 Model 3 sedans in Australia to fix a steering issue. Unrelated to that issue, analysts at Guggenheim initiated coverage of the stock with a Neutral rating and a price target of $924. The firm’s near- and medium-term estimates for Tesla are higher than the consensus of around $850.
Shares of Cassava Sciences traded down about 19.5% to $34.85 as the noon-hour ended Monday. The stock’s 52-week range is $6.70 to $146.16, and the average daily trading volume is about 5.8 million shares. Thus far on Monday, 6.2 million shares had been traded.
Bakkt stock traded down about 10.4%, at $8.52 in a 52-week range of $8.00 to $50.80. The average daily volume is around 18 million shares, and almost 4 million had traded so far on the day.
MoSys/Peraso traded down nearly 7% to $4.19. MoSys stock traded in a 52-week range of $1.85 to $10.75 in the period that ended last Friday. Fewer than 35,000 Peraso shares had traded thus far.
Tesla stock traded down about 3.2% to $901.00, in a 52-week range $539.49 to $1,243.49. The average daily volume is about 26.2 million shares, and about half that total had already traded.