Nasdaq Rebounds in Best day of Year, Tesla Skyrockets 20%
10 Mar 2021 · 3rd Party Analysis
- Nasdaq scores best day since November, up 3.69% as investors go bargain hunting
- Tesla ends five-day losing streak, posts biggest one-day pop since Feb 2020
US equities rose on Tuesday after investors returned to the struggling tech sector. Bond yields declined, which prompted market participants to rotate back into technology and the beaten-up Nasdaq Composite. The technology-driven index staged a massive pull up from recent lows, up 3.69% on Tuesday, driving Tesla higher by nearly 20% for the day. The surge in Tesla shares almost wiped out five straight-losing sessions for the EV maker.
The bounce back in tech shares is the biggest one-day gain so far this year and, overall, the best one-day advance since November. The surge in the Nasdaq Composite came a day after the tech-heavy index slipped into correction territory on Monday, down more than 10% from its recent peak. The other benchmark indexes also performed well. The S&P500 added 1.42%, or 54.09 points, to close the session at 3,875.44, while the Dow Jones Industrial Average was essentially flat, up 0.10%.
Even though Tesla shares soared 20% yesterday, the company’s valuation is still 25% below its top reached in late January. On Jan 26, Tesla broke above $900 per share as an all-time intraday high. Tesla posted its best single-session percentage gain since February 2020, adding more than $106bn to its market cap, the largest single-day market cap gain on record. Elon Musk added more than $25bn to his net worth for the day. Tesla ended Tuesday’s session at $673.58, its highest level in about a week. On Wednesday, Tesla’s market cap stands at $674bn as premarket trading indicates a higher open of about 2%.
The GameStop Case: Another Stock Surge
The “buy everything” day turned out to be a big success for GameStop. Shares of the video game retailer jumped 27%, or $52.40, to reach $246.90 per share. The stock surged to its highest point since January as its market cap topped $17bn. GameStop is up 108% for the past week as the retail trading community remains determined to hold the stock for the long term. In premarket trading, GameStop shares are up another 5%.
In search of bargains on Tuesday, investors were quick to pounce on stocks that were beaten down in previous sessions. Apart from Tesla and GameStop, other stocks that received a double-digit percentage boost were Roku and Square. Popular growth names like Apple, Amazon, and Facebook added more than 3% each.
The snapback in tech stocks comes a day before the latest inflation report. On Wednesday, investors will monitor the release of February’s CPI data to gauge if inflation pressure has been building. Recently, the market has been expecting a sharp rise in prices that has been pushing bond yields higher. As a result, investors rotated out of the tech sector and into real-economy stocks.
In Washington, the House of Representatives is set to vote on the $1.9tn stimulus bill today. Nancy Pelosi, the Democratic speaker of the House, on Tuesday, stated that she is certain that the economic package will pass the lower chamber of Congress.
US futures on Wednesday are trading slightly to the downside, almost unchanged as the European session unfolds.