Market Internals Continue to Churn as Pressure Mounts on Technology and Growth-Oriented Thematic Equities
May 21, 2021
Read Time 5 MIN
The performance of U.S. equities was largely unchanged since the April 2021 BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index”) rebalance. The performance of the S&P 500 Index masked a dramatic and accelerating shift away from technology and growth-oriented equities which fueled much of its gains during 2020. Global cases of COVID-19 reached new highs, as developing countries including India and Brazil struggled to contain mass outbreaks of new variants. Western and developed nations fared much better and have largely stabilized case growth, amidst widespread vaccination efforts which have left many countries with over 50% of the adult population having received at least one vaccine dose. Within the United States, the outcome of broad economic re-opening was apparent in the April readings in new jobs, retail sales and new housing starts.
Thematic Growth-Oriented Stocks Weigh on Performance
The rotation away from thematic growth-oriented stocks weighed on performance over the past month. The dynamic, sector agnostic approach of the BUZZ Index insulated against further weakness as value-oriented holdings featured within the Index, continued to outperform. The top contributors to performance were primarily within the health care and materials sectors and included many recognizable ‘old economy’ stocks such as United States Steel Corp (NYSE: X), Pfizer (NYSE: PFE), Barrick Gold Corp (NYSE: GOLD), Cleveland Cliffs (NYSE: CLF), AT&T Inc. (NYSE: T) and Exxon Mobil Corp (NYSE: XOM).
| Top Contributors: April 8, 2021 – May 13, 2021 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Moderna Inc | MRNA | 1.43 | 0.18 |
| NVIDIA Corp | NVDA | 1.48 | 0.18 |
| United States Steel Corp | X | 1.01 | 0.17 |
| Pfizer Inc | PFE | 1.32 | 0.16 |
| GameStop Corp | GME | 2.35 | 0.15 |
| Barrick Gold Corp | GOLD | 1.3 | 0.15 |
| Goldman Sachs Group Inc | GS | 1.43 | 0.1 |
| Cleveland-Cliffs Inc | CLF | 1.11 | 0.1 |
| AT&T Inc | T | 1.06 | 0.07 |
| Exxon Mobil Corp | XOM | 1.06 | 0.07 |
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. For a complete list of holdings in the ETF, please visit www.vaneck.com.
The top detractors to performance featured many high growth ‘market darling’ stocks whose share price meaningfully appreciated over the past year. Specifically, shares of consumer discretionary and information technology stocks led declines together with thematic growth equities within the industrial sector. Once high-flying stocks such as Virgin Galactic Holdings (NYSE: SPCE), Plug Power Inc. (NASD: PLUG) and leading electric vehicle manufacturer Tesla Inc. (NASD: TSLA) were among the top detractors from performance within the BUZZ Index in the period following the April 2021 Index rebalance.
| Bottom Contributors: April 8, 2021 – May 13, 2021 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Virgin Galactic Holdings Inc | SPCE | 1.56 | -0.98 |
| DraftKings Inc | DKNG | 2.74 | -0.97 |
| Rocket Cos Inc | RKT | 2.34 | -0.83 |
| Plug Power Inc | PLUG | 2.35 | -0.77 |
| Novavax Inc | NVAX | 2.75 | -0.77 |
| Penn National Gaming Inc | PENN | 1.99 | -0.65 |
| Palantir Technologies Inc | PLTR | 2.34 | -0.61 |
| Tesla Inc | TSLA | 3.14 | -0.51 |
| Twitter Inc | TWTR | 1.59 | -0.43 |
| Square Inc | SQ | 1.99 | -0.39 |
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. For a complete list of holdings in the ETF, please visit www.vaneck.com.
Sentiment Stock Highlight: Nvidia Corp
Nvidia Corp (NASD: NVDA) proved noteworthy during the latest period following the April 2021 Index rebalance. Despite declining 4.5% during the period between Index section dates, NVDA still contributed positively to performance. NVDA’s weight within the Index was targeted to drop from a top weight to just a 1% weighting within the BUZZ Index, its lowest weight within the Index since April 2020. The stock proceeded to rally 12.7% in the period between selection date and rebalance date, peaking at $645.49 per share on the date its weight was reduced within the Index to 1%. Sentiment strengthened as the stock proceeded to fall from its all-time high as investors saw value in the newly discounted shares. NVDA’s weight within the BUZZ Index as of the May 2021 selection date is targeted to increase to 1.85%.
Nvidia Stock Price: January 1, 2020 - May 14, 2021
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. For a complete list of holdings in the ETF, please visit www.vaneck.com.
BUZZ Index May 2021 Rebalance Highlights
Spotify
Growth-oriented equities have dropped sharply amid renewed fears of inflation and rising interest rates. The technology-heavy Nasdaq has experienced four straight weeks of losses, and the S&P 500 Index, which had been outperforming over the past few months, has fallen from recent all-time highs. Despite these macro factors, rebalancing activity this month within the BUZZ Index remained muted as the recent events in the markets did little to change investor sentiment on the many of the currently featured stocks within the BUZZ Index. The largest addition to the Index this month was music streaming giant Spotify (NYSE: SPOT), a stock that first entered the Index in June 2020. At the time, SPOT had just begun to break out to a new all-time high and went on to almost double by the end of the year. However, since December 2020, sentiment on SPOT has waned and the stock was no longer featured within the BUZZ the Index. With the rotation trade out of technology stocks in recent months, SPOT has been hit hard, falling almost 35% year to date. Sentiment on SPOT turned sharply positive this month as the stock approached last year's breakout level, suggesting value investors are stepping in and indicating now, may be the time to ‘buy the dip’.
Etsy
Another new addition to the BUZZ Index this month was Etsy (NASDAQ: ETSY). ETSY, the e-commerce platform for curated and custom-designed items, had made its name by offering a unique marketplace for handmade and vintage items not typically available for purchase on Amazon (NASDAQ: AMZN) or at traditional major retailers. Last March, when it became evident that Covid would be digitally transforming the world, online platforms such as Etsy took off. After reaching a low of $30 per share in March 2020, ETSY proceeded to rally eight-fold, reaching over $240 per share earlier this year. However, this month alone, the stock is down almost 22%, after an earnings and outlook miss caused the stock to gap down sharply. Investor sentiment on the once high-flying internet stock turned notably positive amidst the sell-off. In another ‘buy the dip’ moment, investor sentiment served to reflect the broad investor community’s conviction that the stock has fallen too far and currently represents good value. ETSY was removed from the BUZZ Index near its highs during the April 2021 rebalance and after a brief hiatus from the Index, ETSY returns this month with a 0.58% weight.
For more on the BUZZ Index rebalance results, view the BUZZ Index reconstitution report.
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An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index”) is a product of BUZZ Holdings ULC (“BUZZ Holdings”), and has been licensed to Van Eck Associates Corporation for use in connection with the VanEck Vectors Social Sentiment ETF.
“BUZZ” is a trademark of BUZZ Holdings, which has been licensed by Van Eck Associates Corporation for use in connection with the BUZZ Index.
VanEck Vectors Social Sentiment ETF is not sponsored, endorsed, sold or promoted by BUZZ Holdings, or its shareholders, or the licensor of the BUZZ Index and/or its affiliates and third party licensors. BUZZ Holdings makes no representation or warranty, express or implied, to the owners of the VanEck Vectors Social Sentiment ETF or any member of the public regarding the advisability of investing in securities generally or in VanEck Vectors Social Sentiment ETF, particularly or the ability of the BUZZ Index to track general market performance.
BUZZ Holdings’ only relationship to Van Eck Associates Corporation with respect to the BUZZ Index is the licensing of the BUZZ Index and certain trademarks of BUZZ Holdings. The BUZZ Holdings are determined and composed by BUZZ Holdings without regard to Van Eck Associates Corporation or the VanEck Vectors Social Sentiment ETF. BUZZ Holdings has no obligation to take the needs of Van Eck Associates Corporation or the owners of VanEck Vectors Social Sentiment ETF into consideration in determining and composing the BUZZ Index.
BUZZ Holdings are not responsible for and have not participated in the determination of the prices of VanEck Vectors Social Sentiment ETF or the timing of the issuance or sale of securities of VanEck Vectors Social Sentiment ETF or in the determination or calculation of the equation by which VanEck Vectors Social Sentiment ETF securities may be converted into cash, surrendered, or redeemed, as the case may be. BUZZ Holdings have no obligation or liability in connection with the administration, marketing or trading of VanEck Vectors Social Sentiment ETF. There is no assurance that investment products based on the BUZZ Index will accurately track index performance or provide positive investment returns.
BUZZ Holdings is not an investment advisor and the inclusion of a security in the BUZZ Index is not a recommendation by BUZZ Holdings to buy, sell, or hold such security, nor should it be considered investment advice.
BUZZ HOLDINGS DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE BUZZ INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION WITH RESPECT THERETO, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS). BUZZ HOLDINGS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. BUZZ HOLDINGS MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY Van Eck Associates Corporation, OWNERS OF THE VanEck Vectors Social Sentiment ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BUZZ INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL BUZZ HOLDINGS BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN BUZZ HOLDINGS AND Van Eck Associates Corporation, OTHER THAN THE LICENSORS OF BUZZ HOLDINGS.
Effective August 18, 2016, BUZZ Indexes Inc. implemented changes to the BUZZ NextGen AI US Sentiment Leaders Index construction rules. The index constituent count was increased from 25 to 75 stocks and the maximum constituent weight was reduce from 15% to 3%. These change may result in more a diversified exposure to index constituents than under the rules in effect prior to this date. Past performance is no guarantee of future results.
The S&P 500® Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
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Important Disclosures
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included herein.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of 3rd party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index”) is a product of BUZZ Holdings ULC (“BUZZ Holdings”), and has been licensed to Van Eck Associates Corporation for use in connection with the VanEck Vectors Social Sentiment ETF.
“BUZZ” is a trademark of BUZZ Holdings, which has been licensed by Van Eck Associates Corporation for use in connection with the BUZZ Index.
VanEck Vectors Social Sentiment ETF is not sponsored, endorsed, sold or promoted by BUZZ Holdings, or its shareholders, or the licensor of the BUZZ Index and/or its affiliates and third party licensors. BUZZ Holdings makes no representation or warranty, express or implied, to the owners of the VanEck Vectors Social Sentiment ETF or any member of the public regarding the advisability of investing in securities generally or in VanEck Vectors Social Sentiment ETF, particularly or the ability of the BUZZ Index to track general market performance.
BUZZ Holdings’ only relationship to Van Eck Associates Corporation with respect to the BUZZ Index is the licensing of the BUZZ Index and certain trademarks of BUZZ Holdings. The BUZZ Holdings are determined and composed by BUZZ Holdings without regard to Van Eck Associates Corporation or the VanEck Vectors Social Sentiment ETF. BUZZ Holdings has no obligation to take the needs of Van Eck Associates Corporation or the owners of VanEck Vectors Social Sentiment ETF into consideration in determining and composing the BUZZ Index.
BUZZ Holdings are not responsible for and have not participated in the determination of the prices of VanEck Vectors Social Sentiment ETF or the timing of the issuance or sale of securities of VanEck Vectors Social Sentiment ETF or in the determination or calculation of the equation by which VanEck Vectors Social Sentiment ETF securities may be converted into cash, surrendered, or redeemed, as the case may be. BUZZ Holdings have no obligation or liability in connection with the administration, marketing or trading of VanEck Vectors Social Sentiment ETF. There is no assurance that investment products based on the BUZZ Index will accurately track index performance or provide positive investment returns.
BUZZ Holdings is not an investment advisor and the inclusion of a security in the BUZZ Index is not a recommendation by BUZZ Holdings to buy, sell, or hold such security, nor should it be considered investment advice.
BUZZ HOLDINGS DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE BUZZ INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION WITH RESPECT THERETO, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS). BUZZ HOLDINGS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. BUZZ HOLDINGS MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY Van Eck Associates Corporation, OWNERS OF THE VanEck Vectors Social Sentiment ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BUZZ INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL BUZZ HOLDINGS BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN BUZZ HOLDINGS AND Van Eck Associates Corporation, OTHER THAN THE LICENSORS OF BUZZ HOLDINGS.
Effective August 18, 2016, BUZZ Indexes Inc. implemented changes to the BUZZ NextGen AI US Sentiment Leaders Index construction rules. The index constituent count was increased from 25 to 75 stocks and the maximum constituent weight was reduce from 15% to 3%. These change may result in more a diversified exposure to index constituents than under the rules in effect prior to this date. Past performance is no guarantee of future results.
The S&P 500® Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.