BUZZ Investing: U.S. Markets Climb Amid Crypto Rally
U.S. domestic markets saw gains, driven by advancements in cryptocurrency-related stocks and shifting investor expectations regarding interest rate expectations.

U.S. domestic markets gained during the recent period between Index selection dates (February 8, 2024 – March 21, 2024, the “Period”). The S&P 500 Index climbed by 3.3%, while the tech-heavy Nasdaq Composite Index increased by 2.3%. This marked the second consecutive Period the Nasdaq didn’t outperform the S&P 500, indicating a diversification of market gains beyond the dominant ‘Magnificent Seven’ mega-cap tech stocks that have previously led market rallies. The BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index”) notably outperformed with a 9.4% rise, primarily fueled by significant advancements in cryptocurrency-related stocks, in sync with Bitcoin’s impressive 56% jump. This surge in Bitcoin’s value followed the introduction of new U.S. spot bitcoin exchange-traded products, drawing substantial investments. NVIDIA Corp (NASD: NVDA) emerged as a focal point of the earnings season, its stock soaring over 28% during the month and eclipsing a $2 trillion valuation. This surge was fueled by the company’s impressive revenue growth of 265%, significantly outpacing analyst expectations, largely due to its booming artificial intelligence business.

The release of the Federal Reserve’s FOMC minutes on February 22nd further shaped market dynamics, revealing the Fed’s cautious approach towards interest rate adjustments. Despite expectations for eventual rate cuts, the minutes clarified that such changes would not occur imminently, leading to a significant shift in investor expectations regarding the timing of these adjustments. According to the CME FedWatch Tool, the probability of the Fed maintaining current rates through the June meeting surged from under 4% to over 40% during the Period. Reflecting shifting interest rate expectations, 2-year bond yields rose by 24 bps during the Period. This recalibration of expectations regarding monetary policy underscored the nuanced relationship between central bank policy, economic data, and market movements, highlighting the delicate balance the Fed seeks to maintain amidst ongoing economic uncertainties.

Target Rate Probabilities for June 2024 Fed Meeting

Target Rate Probabilities for June 2024 Fed Meeting

Source: CME FedWatch Tool

The BUZZ Index returned 13.08% during the month of February compared to a return of 5.34% for the S&P 500 Index during the same period. Year-to-date, the BUZZ Index leads the S&P 500 with returns of 9.00% and 7.11%, respectively, as of the end of February.

Shares of Cryptocurrency-related Stocks Pace Advancing Stocks Within the BUZZ Index

In the recent Period, MicroStrategy Inc (NASD: MSTR), recognized for its substantial Bitcoin investments, saw its stock soar by 185.3%, nearly tripling in value, while Coinbase (NASD: COIN), a premier cryptocurrency exchange, experienced a 76.6% rise. These two companies accounted for almost two-thirds of the BUZZ Index’s growth during this Period. Super Micro Computer Inc (NASD: SMCI), known for its high-performance server technology catering to data centers, cloud computing, and enterprise IT, also enjoyed significant growth with its shares increasing nearly 62%. This surge elevated the company’s market capitalization beyond $50 billion, a milestone largely attributed to its robust financial performance and strategic positioning in the AI server domain, further enhanced by its strong partnership with Nvidia.

Top BUZZ Index Contributors: February 8, 2024 – March 21, 2024
Company Ticker Average Weight (%) Return Contribution (%)
MicroStrategy Inc MSTR 3.57 4.13
Coinbase Global Inc COIN 4.07 2.18
Super Micro Computer Inc SMCI 3.51 1.29
Robinhood Markets Inc HOOD 1.98 0.98
NVIDIA Corp NVDA 3.38 0.83
Celsius Holdings Inc CELH 1.34 0.67
Marathon Digital Holdings Inc MARA 0.57 0.64
Carvana Co CVNA 1.41 0.57
Advanced Micro Devices Inc AMD 3.18 0.35
PayPal Holdings Inc PYPL 2.94 0.34

Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.

During the recent Period, electric vehicle (EV) manufacturers Lucid Group Inc (NASD: LCID), Rivian Automotive Inc (NASD: RIVN), and Tesla Inc (NASD: TSLA) experienced notable declines in their stock performance. LCID’s stock dropped by 25% as the company missed quarterly revenue targets and reported significant cash burn, further impacted by its production guidance falling short of expectations. RIVN’s shares reached a new low after announcing underwhelming fourth-quarter results, including a 10% reduction in its salaried workforce, prompting sharp analyst downgrades. Meanwhile, Boeing (NYSE: BA) saw a 13.4% decrease in its stock value, largely attributed to persistent safety and quality concerns following new incidents involving its passenger jets, which have heightened scrutiny and affected the company’s reputation.

Bottom BUZZ Index Contributors: February 8, 2024 – March 21, 2024
Company Ticker Average Weight (%) Return Contribution (%)
Lucid Group Inc LCID 2.56 -0.76
Rivian Automotive Inc RIVN 1.55 -0.71
Affirm Holdings Inc AFRM 1.03 -0.51
Tesla Inc TSLA 2.74 -0.44
Boeing Co/The BA 2.69 -0.38
SoFi Technologies Inc SOFI 2.85 -0.37
Paramount Global PARA 1.81 -0.28
Apple Inc AAPL 2.71 -0.24
Roku Inc ROKU 0.44 -0.19
Unity Software Inc U 0.56 -0.13

Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.

BUZZ Index March 2024 Rebalance Highlights

Lyft, Inc.

Lyft Inc’s (NASD: LYFT) Q4 earnings report last month was highlighted by strong performance and optimistic guidance. Initially, Lyft’s earnings were notable for a significant reporting mishap, where EBITDA margins were incorrectly stated as 5% rather than the accurate 0.5%, leading to a dramatic 70% spike in Lyft’s shares during after-hours trading until the company issued a correction. Although this mistake led to a flurry of social media ridicule, focus quickly returned to Lyft’s solid earnings. In a ride-sharing industry where profitability has been challenging, Lyft reported a 4% increase in revenue and significantly narrowed its losses from -$588 million in Q4 2022 to just -$26 million in the recent quarter. With margins expected to improve, Lyft is on track to be free cash flow positive this year. This turnaround in performance has notably boosted sentiment toward LYFT, culminating in its recent addition to the BUZZ Index with a 1.4% weight.

Rivian Automotive, Inc.

After years of hype and excitement in the electric vehicle industry led by the surge of Tesla (NASD: TSLA), the environment for EVs has soured over the past year. The major traditional automakers, who had rushed to electrify their existing lineups, were having trouble recouping costs amidst declining demand for their vehicles. Dedicated EV automakers, such as Lucid (NASDAQ: LCID) and Rivian (NASDAQ: RIVN), who had finally started to mass produce their cars, were dealing with production obstacles and difficulty bringing down prices. Nevertheless, online sentiment towards RIVN and LCID has remained high, evident in the rising weights of these stocks within the BUZZ Index, even as they lagged following their recent earnings. On March 7th, RIVN announced its new R2 model in a planned reveal event. In a complete surprise however, Rivian also announced a second new model, the R3, which is expected to cost as little as $35,000 USD. The stock jumped on the announcement, and sentiment surged. This month RIVN climbs to a maximum 3% weight in the BUZZ Index.

For more on rebalancing results and a full breakdown of index constituents added and removed for the month, view the BUZZ Index reconstitution report.

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Originally published 25 March 2024. 

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