It's not just techs getting walloped Wednesday. The Consumer Discretionary Select Sector Fund is having its worst day in at least a year.
The ETF is down 3.5% in late trading, which would surpass the 3.4% tumble made on July 20, 2023, according to Dow Jones Market Data. Its year-to-day gain has withered to 2.4%.
The main culprit is Tesla, which plummeted more than 10% after its earnings report. The EV company accounts for 18% of the fund's weighting. Amazon.com is 22% of the consumer discretionary ETF, and the online retailer's loss of nearly 3% also hurt the sector. Home Depot, the No. 3 holding, fell about 2%.
The ETF is testing its 50-day moving average, where it desperately needs a rebound to revive its uptrend. Further losses below the line would add to a bearish picture.
1:16 p.m. ET
Ethereum ETF's Early Results Lag Bitcoin
After the first day of trading in ethereum exchange traded funds, the cryptocurrency is a proving to be a distant second to bitcoin.
Trading volume topped $1 billion on Tuesday. That was well behind the roughly $4.7 billion on Day 1 for bitcoin ETFs, according to research from BestBrokers.
"Bitcoin, the pioneer in the cryptocurrency space, continues to enjoy stronger institutional backing and market enthusiasm," says Alan Goldberg, crypto analyst at BestBrokers. "Ethereum, while substantial, seems to be playing catch-up in the ETF market, possibly reflecting its evolving status among investors and ongoing developments within its ecosystem."
Bitcoin Ahead Of Ethereum
The SEC approved eight ETFs, including the Grayscale Ethereum Mini Trust, Franklin Ethereum ETF, VanEck Ethereum ETF and BlackRock's iShares Ethereum Trust.
Their shares have moved little. Grayscale Ethereum Trust converted to a spot ETF and traded for five years before that. It now is forming a cup-with-handle base.
Bitcoin is the largest cryptocurrency with a market cap of $1.268 trillion and ethereum is No. 2 with $409.3 billion, according to Statista.
Wells Fargo: The Downside Of Small Caps
The Nasdaq, S&P 500 and Dow Jones Industrial Average are down so far this week. But the Russell 2000 is up 2.5% as it rides a wave of optimism about lower interest rates. The possibility of lower taxes and less regulation if former President Donald Trump returns to the Oval Office also made small caps a favored trade.
"However, keep in mind that potential tariffs could hurt the sourcing ability for many small companies and over 40% of (Russell 2000) stocks are not profitable," cautioned Scott Wren, senior global market strategist at Wells Fargo Investment Institute. "We do not believe the underlying fundamentals are in place for an upgrade to small caps. Our rating remains most unfavorable."
Wren's recommendation: "Position portfolios for the economy and not who you think might win the election."
Tech Wreck By Numbers
Roundhill Magnificent Seven ETF is down more than 5% at midday. It's on track for its worst day since it started trading in April 2023, according to Dow Jones Market Data.
The ETF is testing its 50-day moving average. If the ETF can rebound from that level, there's hope for the Magnificent Seven. A break below the line would be a signal to at least lighten up on this group of megacaps.
Tesla has lost $91.8 billion in market cap so far today, to $693.97 billion. It would be its worst loss since April 26, 2022.
Microsoft fell below its 50-day moving average and is back to its 430.82 buy point. Alphabet broke below support at the 50-day line. Amazon.com and Meta Platforms were already below their 50-day lines.
