Commenting on Tesla’s vehicle sales goal and today’s trading, Gorilla Trades strategist Ken Berman said:
2021 Kicks Off With A Sharp Risk-Off Shift
The major indices are all trading significantly lower at midday as the year kicked off with a sharp risk-off shift on Wall Street, design a broadly bullish open this morning. The rising odds of a Democratic sweep on tomorrow's runoff elections in Georgia and President Trump's push to challenge the November results spooked investors following a relatively quiet end to 2020, with the worrisome European and global COVID numbers also weighing on sentiment. Even though the Dow hit a marginal new all-time high in early trading, it's now the weakest of the large-cap benchmarks due to the selloff in cyclical issues, with small-caps hitting a fresh two-week low too following several weeks of above-average returns.
Tesla Got Close To Its Ambitious Vehicle Sales Goal
We got a batch of bearish economic reports as well, from the U.S., China, and Europe, as the global manufacturing sector seems to be entering a soft patch due to the new wave of COVID-related restrictions. Tesla (TSLA, +4.3%) has been providing some support for the market amid the broad-based selloff, as the carmaker reportedly got close to its ambitious 500,000 vehicle sales goal in 2020, while chipmakers, such as Intel (INTC, +1.1%) and NVIDIA (NVDA, +2.2%) have been gaining ground too. The Volatility Index (VIX) skyrocketed by almost 20% in the first hours of trading, so the traditionally very active January could start with a tumultuous week for investors.
Dow: 30,073, - 533 or 1.7%
S&P 500: 3,695 - 61 or 1.6%
Nasdaq: 12,709, - 179 or 1.4%
Russell 2000: 1,947, - 28 or 1.4%
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Market breadth has been relatively weak this morning, with decliners outnumbering advancing issues by a 7-to-3 ratio on the NYSE at midday. Only 8 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 208 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure. Apart from materials, which have been boosted by the surging price of oil, all of the key sectors are in the red at midday with financials, industrials, and real estate stocks losing the most ground and energy and healthcare stocks holding up relatively well in the volatile environment. Stay tuned!