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NEW YORK, Jan 27 (Reuters) - Cathie Wood's ARK Innovation Fund is closing in on the best monthly performance in its history as it rides a rebound in many of the high-growth stocks that took a beating last year. The $7.3 billion ARK Innovation (ARKK.P) fund is up slightly more than 25% for the month to date, putting it ahead of the 25% gain it notched in April 2020. Investors are awaiting the Feb. 1 conclusion of the Fed's monetary policy meeting for clues on whether easing inflation is swaying policymakers to a less hawkish view. The central bank is widely expected to increase its key policy rate by another 25 basis points next week. Overall, January's rally has helped ARK Innovation's assets under management grow by approximately $1.2 billion this month, while investors have pulled a net $59 million out of the fund, according to Lipper data.
The odds are “too high on Goldilocks; there’s still no easy way out,” analysts at BoFA Global Research wrote on Tuesday. Stocks tend to perform poorly in economic downturns, with the S&P 500 falling an average of 29% during recessions since World War Two, according to Truist Advisory Services. Those rebounds inevitably crumbled, leaving the S&P 500 with a 19.4% annual loss, its worst since 2008. The most recent rally has lifted the S&P 500 more than 11% from its October lows. Strategists polled by Reuters at the end of 2021 saw the S&P 500 gaining a median of 7.5% last year.
NEW YORK, Jan 19 (Reuters) - Star stock picker Cathie Wood of Ark Invest suggested the rally in energy stocks will soon end and reiterated her bullish view on electric vehicle maker Tesla Inc (TSLA.O) in a webinar on Thursday. Yet the rally energy stocks over the last six months despite the roughly 30% decline in the price of oil suggests that the market is now over-valuing value stocks, she said. Tesla, meanwhile, will continue to take market share as global oil demand falls by 30% or more over the next five years, Wood estimated. Wood's ARK Innovation fund fell 3.2% on Thursday while the benchmark S&P 500 fell nearly 0.8%. The fund fell nearly 67% in 2022, leaving it among the worst performing U.S. equity funds tracked by Morningstar.
In a note to employees, CEO Satya Nadella attempted to address the divergent outlook for different parts of the business. Nadella said the layoffs, affecting less than 5% of Microsoft's workforce, would conclude by the end of March, with notifications beginning Wednesday. Along with Amazon, Facebook parent Meta Platforms Inc (META.O) announced cuts of 11,000 jobs, while cloud-based software company Salesforce Inc (CRM.N) said it would cut 10% of its 80,000-member workforce. Under U.S. law, most employers are required to report staff cuts affecting 50 or more workers at a single location. But growth dropped to 35% in the first fiscal quarter of 2023, and the company projects more declines to come.
They projected their key policy rate would top out at between 5.00% and 5.25% this year, up from a current 4.25%-4.50% rate. Market pricing indicates investors remain wedded to a more dovish view, with the policy rate peaking below 5% around mid-June before falling in the second half of the year. Rieder believes policymakers will raise rates by 25 basis points at the next two meetings, with further 25 basis point increases possible, depending on data. Investors in short-term options had priced in a much sharper move of about 2% going into Thursday's CPI print, according to data from market maker Optiver. Tiffany Wilding, PIMCO's North American economist, believes the Fed is likely to raise rates just two more times this year before pausing.
The gains were broad across equity markets, with Europe's STOXX 600 near a one-month high (.STOXX) and emerging market stocks (.MSCIEF) up 2.4% on the day. Asian stocks rose after China reopened its borders, bolstering the outlook for the global economy. The U.S. dollar index was down around 0.8%, near its lowest in seven months after it dropped 1.2% on Friday . In bond markets, European government bond yields rose, in a reversal after the previous weeks' sharp falls. Bond yields move in the opposite direction of prices.
NEW YORK, Jan 6 (Reuters) - Star stock picker Cathie Wood's Ark Invest sold 403,990 shares of embattled crypto-focused bank Silvergate Capital Corp (SI.N) on Thursday as shares in the firm plunged more than 40%, according to disclosures by Ark Invest. The selling nearly liquidated the firm's share holdings and came from the $645 million ARK Fintech Innovation ETF (ARKF.P), and not the firm's flagship $5.9 billion ARK Innovation fund (ARKK.P), which does not have a position in the company. Total deposits from digital asset customers at Silvergate fell to $3.8 billion at the end of December, compared to $11.9 billion at the end of September. Ark Invest first bought shares in Silvergate in November, 2019, according to Morningstar data. Shares of Silvergate were down 9.2% in midday trading on Thursday, while shares of the ARK Fintech Innovation fund were up 0.8%.
Those funds dropped by an average of 42.1% last year, more than double the average 17% decline among U.S. stock funds, according to Morningstar. The $6 billion Baron Partners Retail fund, which leads all US mutual funds with about 52% of its assets in Tesla shares, fell nearly 43% last year, while the $54 million Zevenbergen Genea Institutional fund, which has 13% of its assets in Tesla, fell nearly 59%. Tesla fell about 65% last year, with declines accelerating after Musk decided to buy social media network Twitter, which some investors see as a distraction to the chief executive. His net worth has fallen by more than $100 billion, according to Forbes, bumping him from the position of world's richest person. The fund fell 67% last year, putting it near the bottom of all U.S. equity funds.
The ARK Innovation Fund has lost around 67% year to date, more than tripling the decline of the S&P 500 index (.SPX). With the S&P 500 on pace for its biggest annual decline since the Great Financial Crisis, few funds are likely to escape 2022 unscathed. Wood's fund ranked 3,544 among all 3552 actively-managed U.S. equity mutual funds tracked by Morningstar. The worst performing fund of the year, by comparison, was the Voya Russia fund, which is down 92% for the year to date. CRASH LANDINGOther funds that soared in recent years on the backs of large bets on technology stocks fell on hard times in 2022.
NEW YORK, Dec 23 (Reuters) - Bruised investors are hoping a so-called Santa Claus rally can soften the pain of a tough year in U.S. stocks and potentially brighten the outlook for 2023. Friday is this year's start date for this rally named after Santa Claus - if it happens. The phenomenon has lifted the S&P 500 an average of 1.3% since 1969, according to the Stock Trader's Almanac. A December without a Santa rally has been followed by a weaker-than-average year, data from LPL Financial going back to 1950 showed. "The lack of a 'Santa Claus rally' this month, with a 'lump of coal selloff' in its place, is a troubling sign about 2023 US equity returns," strategists at DataTrek wrote.
That works out to a 31.2% return on total average short interest of $973.6 billion throughout the year, according to S3 Partners. Stanphyl Capital portfolio manager Mark Spiegel, who has been short Tesla "constantly, in varying size" since 2014, said a bet against Tesla was his fund's most profitable individual short position this year. While higher interest rates have punished growth stocks, some investors believe Tesla CEO Elon Musk's purchase of Twitter is diverting his time running the electric car company. Long-short hedge funds, which bet on stock prices rising or falling, posted a 9.7% loss through November, according to data provider HFR. Charles Lemonides, portfolio manager at $226 billion hedge fund ValueWorks LLC, believes tight monetary policy will weigh on risk appetite next year.
A 60/40 portfolio, which typically allocates 60% of assets into stocks and 40% into bonds, counts on moves in the two asset classes to offset one another, with stocks strengthening amid economic optimism and bonds rising during uncertain times. So-called 60/40 portfolios, which mix stocks and bonds, are on place for their first down year since 2018. Though market participants tend to avoid bonds during inflationary times, they are a popular destination for haven-seeking investors when the economy wobbles. Consecutive annual declines in the 60/40 portfolio have been rare. Higher-than-expected borrowing costs or rebounding inflation could deal another blow to investors in both stocks and bonds.
The fed funds rate currently stands in the 4.25%-4.50% range. Plenty of investors believe the Fed will stick to its guns, even if the economy wobbles. The Fed's economic projections showed rates dropping to 4.1% in 2024, higher than estimated three months ago. She is expecting the gyrations that rocked bonds this year to continue, driven in part by investors second-guessing the Fed's commitment to keeping monetary policy tight. "We have a generation of traders that has never seen the Fed not bail it out when push comes to shove."
Yet some investors are betting a number of those beaten-down stocks and possibly the broader market could snap back in January, once the selling period is over. DoubleLine founder Jeffrey Gundlach told CNBC on Wednesday that risk assets will likely rally in January once retail investors finish tax-loss selling. Strategists at Evercore wrote on Nov. 30 that they were "buyers of stocks whose 2022 Tax Loss selling pressure will soon abate." Investors appear to have already started selling underperforming shares. Private clients at BofA, for instance, sold nearly $1.4 billion of stocks in likely tax-motivated selling in November, up from roughly $800 million last year, and appear poised to continue that outsized rate of selling this month, the firm said.
JPMorgan, Citi and BlackRock are among those who believe a recession is likely in 2023. Nevertheless, many on Wall Street are increasing allocations to areas of the market that have a reputation for outperforming during uncertain economic times. The S&P 500 Health Care sector is down around 1.7% year-to-date, handily beating the broader index's performance. JPMorgan's analysts forecast a "mild recession" and expect the S&P 500 to test its 2022 lows in the first quarter of next year. Signs of ebbing inflation have fueled hopes that the Fed may tighten monetary policy less than expected, supporting a rebound in the S&P 500 that has buoyed the index from its October low.
The S&P 500 is down 14.4% year-to-date. U.S. consumer prices rose less than expected in October, supporting the view that inflation was ebbing. Further ahead, some of Wall Street’s biggest banks are now forecasting that the Fed's monetary policy tightening will bring on a recession next year. In options markets, traders appear more preoccupied with not missing out on more gains in stocks than guarding against future declines. The one-month moving average of daily trading in bearish put contracts against bullish calls on the S&P 500 index-tracking SPDR S&P 500 ETF Trust's options is at its lowest since January 2022, according to Trade Alert data.
Nov 27 (Reuters) - Collapsed cryptocurrency exchange FTX remains the subject of "an active and ongoing investigation" by Bahamian authorities, Bahamian Attorney General Ryan Pinder said on Sunday, as he praised the Bahamas' regulatory regime and swiftness with which it responded to the crisis. FTX, which had been among the world's largest cryptocurrency exchanges, is headquartered in the Bahamas. In mid-November, the Royal Bahamas Police said that government investigators in the Bahamas were looking at whether any "criminal misconduct occurred." read more"We are in the early stages of an active and ongoing investigation," Pinder said on Sunday, according to prepared remarks for the speech. Bahamas securities regulators had revoked FTX Digital's license and began involuntary liquidation proceedings the day before the U.S. bankruptcy case kicked off.
September, meanwhile, is the worst month of average for stocks, with a 0.7% average decline. Gains would be welcomed by many investors after seeing the S&P 500 Index (.SPX) fall around 16% so far this year. Still, weighing on the market has been the U.S. Federal Reserve's actions to aggressively tighten interest rates to fight inflation. The average Santa rally has boosted the S&P 500 by 1.3% since 1969, according to the Stock Trader's Almanac. The painful double-digit declines in both U.S. stocks and bonds, meanwhile, have made both asset classes more attractive for long-term investors, said Liz Ann Sonders, chief investment strategist at Charles Schwab.
NEW YORK, Nov 25 (Reuters) - Investors are closely watching U.S. retail stocks as a barometer of consumer confidence as inflation bites, as the most important shopping season of the year begins on Friday. That would come in below both the 13.5% jump reported last year, and the 9.3% gain in 2020. Expectations for purchasing long-lasting manufactured goods fell 21% due to high interest rates and high prices, the survey found. Shares of Walmart are up 7.5% for the month to date, while shares of Target are down 1.2%. Kohl's, meanwhile, withdrew its forecast as it faces weakening demand due to rising prices.
NEW YORK, Nov 22 (Reuters) - Can Walt Disney Co (DIS.N) bank on another hit sequel? That appears to be the hope behind the company's surprise decision to bring back former chief executive Bob Iger to replace Bob Chapek. During his first tenure from 2005 to 2020, Disney's annualised shareholder returns were more than 14%, well above its rival Comcast Corp (CMCSA.O) and the broader stock market, and in total in that period the stock rose more than 400%. Yet there are reasons to think that Disney may have made the right decision in bringing back Iger, Bingham said. “I think this is a game-changer," said Stephanie Link, chief investment strategist and portfolio manager at Hightower Advisors, about Disney.
Consumer discretionary stocks, a group whose members run the gamut from Amazon.com Inc (AMZN.O) and automaker Tesla Inc (TSLA.O) to retailer Target Corp (TGT.N), have been walloped by surging prices, with the S&P 500’s consumer discretionary sector falling nearly 33% for the year to date compared with a nearly 17% fall for the broader index. Investors poured a net $1.05 billion into consumer discretionary stocks in the past week, the sixth-largest weekly inflows since 2008, data from BofA Global Research showed. “Everybody is watching the strength of the consumer and so far the consumer has held.”Yruma is bullish on retailers Nordstrom Inc (JWN.N) and Target. To be sure, consumer stocks have had more than their fair share of woes this year. The bank's analysts are underweight the consumer discretionary sector.
REUTERS/Octavio JonesNEW YORK, Nov 16 (Reuters) - Former President Donald Trump's entry on Tuesday into the 2024 presidential race confirmed the world's "worst kept secret" and created another variable for markets that some investors say remains a low priority for now. Trump's announcement, meanwhile, came as little surprise to investors, as the former president had telegraphed the possibility he might run again for some time. DIVIDED WE HURTUnlike during Trump's previous bid, the discord within the Republican party also worried some investors. The Republican president has claimed credit for the rise, tweeting often about Wall Street's performance. Both stocks rallied earlier this month on reports Trump was considering a third bid for the White House.
REUTERS/Octavio JonesNEW YORK, Nov 15 (Reuters) - Former President Donald Trump's entry on Tuesday into the 2024 presidential race confirmed the world's "worst kept secret" and created another variable for markets that some investors say remains a low priority for now. Trump, who has mounted relentless attacks on the integrity of U.S. voting since his 2020 election defeat, announced his bid at his Mar-a-Lago estate in Florida, seemingly with the aim of pre-empting potential Republican rivals. Trump's announcement, meanwhile, came as little surprise to investors, as the former president had telegraphed the possibility he might run again for some time. Shares of Digital World Acquisition Corp (DWAC.O), the blank-check company looking to take Donald Trump's social media venture public, fell 8.8% on Tuesday, while software developer Phunware Inc (PHUN.O), which was hired by Trump's 2020 re-election campaign to build a phone app, slid 4.7%. Both stocks rallied earlier this month on reports Trump was considering a third bid for the White House.
Hedge fund Farallon Capital, for instance, bought nearly 7.8 million shares of Twitter during the quarter that ended Sept. 30, while Franklin Resources, the parent company of mutual fund firm Franklin Templeton, added nearly 2.6 million shares to an existing position of less than 100,000 shares. Shares of Twitter fell to as low as $33 during the third quarter before ending September near $44. The value of Twitter shares jumped 23.2% in October when Musk completed the deal on Oct. 27 by paying $54.20 per share. While some funds reaped short-term rewards, other investors left some potential gains on the table by selling before the October rally in Twitter shares. Wells Fargo & Co (WFC.N) sold 3.7 million shares of the company, while ClearBridge Investments LLC sold 1.9 million shares.
NEW YORK, Nov 14 (Reuters) - Hedge funds Group One Trading LP, Two Sigma Investments LP and Holocene Advisors LP were among the largest purchasers of Tesla Inc (TSLA.O) stock during the third quarter, filings released Monday showed. Group One Trading added a new position of slightly more than 1 million shares, giving it a market value of nearly $276 million as of Sept. 30. Two Sigma, meanwhile, added nearly 323,500 shares for a stake worth $14.7 million as of the end of September, while Holocene Advisors added nearly 319,000 shares for a stake worth about $84.6 million. Tesla's shares have fallen significantly since the end of the quarter, dropping 16% compared to the 11.4% gain in the benchmark S&P 500 index. The Maryland State Retirement and Pension System and Abbot Financial Management Inc were among the few large investors who shed their full stake in Tesla during the quarter, filings show.
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