Why Tesla, Microsoft, Nvidia, FAANG Remind Forecaster Of 2021 'Meme Stocks' Effect

Market forecaster Jim Bianco, president and macro strategist at Bianco Research, explained how the rally in the S&P 500 index during the early part of the year was mostly led by a couple of stocks and did not represent the broader market performance.

"On February 2 (the day after the Fed presser and the day before the booming 517k payroll report), the S&P 500 was up over 8% for the year (black line). What was missing in most of the analysis is the majority of the overall S&P 500’s gains were just the eight FAANG+ M N T stocks (names on the chart), show in red," Bianco tweeted.

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Price Action: Bianco is referring to how the so-called FAANG stocks that include Meta Platforms Inc META, Apple Inc AAPL, Amazon.com, Inc. AMZN, Netflix Inc NFLX, and Alphabet Inc GOOGL GOOG coupled with Microsoft Corp MSFT, NVIDIA Corporation NVDA and Tesla Inc TSLA shares boosted the market in January.

However, since the beginning of February, the S&P 500 index has lost over 2.5% as stronger economic data and higher-than-expected inflation sparked concerns the Federal Reserve will have to continue with its rate hikes for longer than expected.

On a year-to-date basis, the S&P 500 index is up just 3.82%. The SPDR S&P 500 ETF Trust SPY has gained 4.09% during the period while the Vanguard Total Bond Market Index Fund ETF BND has lost 0.4%.

Bianco compares this movement with the meme stock frenzy in 2021. "In other words, it was just like 2021, meme stocks and a handful of “ARK” stocks drove the market. And speaking of ARK, January was its best year ever, more than 20%," he said.

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