Welcome to CrushTheStreet.com’s Weekly Market Wrapup!
Let’s jump right in to our top story of the week…High-flying momentum names were given a thrashing, with the bearishness in this sector perhaps best exemplified by the severe sell-off of Twitter, which has lost over 17% of valuation since Cinco de Mayo. Like the festive holiday, the Twitter bulls recent attempt at a recovery was largely ceremonial, bringing to question if the charm has left the social media sphere and what implications this has for the broader equities market.
According to BloombergView, the main reason for the sell-off was the authorization for employees and venture capital shareholders to release their holdings to the public markets. Since the stampede occurred in the absence of any meaningful news, this suggests that the insiders are either fearful for Twitter’s ability to compete, or that they have concerns regarding its specific industry.
Twitter’s Market Performance
One of the troubling aspects of Twitter’s market performance is that it mirrors that of the broader indices. Since the launch of their IPO, the overall participation rate for Twitter stock has steadily declined, only breaking new ground in the recent sell-off. Similarly, volume levels in the benchmark S&P 500 have been trending negatively since the market crash of 2008, and such bearishness is further evident this year, with large volume spikes only occurring under volatile sessions. This suggests that under normal conditions, people are fearful of the markets and any signal that confirms this bias will likely lead to more aggressive sell-offs in the future.
For now, those fears are put on a tentative hold, with the Dow Jones and the S&P 500 providing a mixed and disappointing performance, while the NASDAQ led the markets throughout much of the day Thursday but sharply reversed course towards the ringing of the closing bell, ultimately shedding four-tenths of a percent of valuation. The embattled technocentric index posted three consecutive down days and is behind 2% for the week. Thursday’s performance was in sharp contrast to the strength of earnings season, with 68.3% of reporting companies from the S&P index beating earnings estimates, according to a report from CNBC. However, there is a growing concern with small cap equities, with the Russell 2000 index underperforming against its larger-cap brethren.
Despite the signs of a decline in confidence in the equities, money did not pour into safe haven assets this week as gold struggled to maintain its footing, closing down at $ 1,290 per troy ounce. Meanwhile, silver absorbed a sizable 1.3% drop midweek, eventually settling at $ 19.23. But the surprise laggard was palladium, which suffered a loss of more than two-and-a-half percent on Wednesday as the Ukrainian crisis fell off the mainstream media’s radar.
On the digital front, bitcoin’s performance was muted this week, with the cryptocurrency closing just below the $450 mark.
And that will do it for this edition. Thanks for watching and we’ll see you next week!