ETF Trends
BUZZ Investing: Meme-Stocks Make a Comeback
VanEck
14 min read

In This Article:

This article was originally published on ETFTrends.com.

The prospect of peak inflation has re-ignited the battered growth and meme stock craze in names such as Coinbase Global Inc (COIN) and AMC Entertainment Holdings (AMC) in the Buzz Index.

Equities rebounded as investors reset their expectations regarding the prospects for continued elevated levels of inflation and the probability of a domestic recession. The BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index” or “Index”) gained 21.8% during the recent period between Index selection dates (July 14, 2022, to August 11, 2022, the “Period”), outpacing gains recorded by the S&P 500 Index by over ten percentage points. The rally was partly fueled by dovish remarks from the U.S. Federal Reserve Chair Jerome Powell during a news conference that followed the central bank’s second consecutive seventy-five basis point (“bps”) increase of its target rate. Powell noted that “while another unusually large increase could be appropriate at our next meeting, that is a decision that will depend on the data we get between now and then,” while adding, “as the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases.”

Longer-dated treasuries rallied alongside equities following Powell’s comments, with the yield on the benchmark U.S. ten-year bond falling, flattening out the yield curve relative to the 2.5% short-term level of the Federal Funds Target Rate. Other measures of risk reset amidst the bullish macro environment. High yield credit spreads measured by the Markit CDX North America High Yield Index, and the CBOE Volatility Index (the “VIX”) fell. Despite the ‘risk-on’ gains across the landscape, the U.S. dollar continued its advance against a basket of currencies, notably trading above parity with the Euro for the first time in nearly twenty years.

The BUZZ Index returned 14.7% during the month of July compared to a return of 9.2% for the S&P 500 Index during the same period. Year-to-date, the BUZZ Index trails the S&P 500 with returns of -36.5% and -12.6%, respectively, as of the end of July.

Strength in growth and meme-related equities

Shares of some of the hardest hit segments of the market rallied sharply as technology, growth-oriented, and meme-related equities rocketed higher during the Period. Meme stocks were led by AMC Entertainments Holdings Inc. (AMC), with shares of the nation’s largest movie chain operator advancing 69% during the Period. Fueling gains in the stock was the announcement of a special distribution to AMC shareholders. AMC Preferred Equity Units (dubbed “APE” in a nod to the investors who turned the company into a meme stock and often refer to themselves as “ape nation.”) will list under the ticker APE on the New York Stock Exchange. Coinbase Global Inc (COIN) jumped 57% during the period. The leading platform for cryptocurrency trading soared after announcing a partnership with BlackRock Inc. (BLK). The deal will see Coinbase exchanges connecting with Aladdin, BlackRock’s investment technology platform serving institutional clients, to provide direct access to cryptocurrency trading, beginning with Bitcoin. The deal with one of the world’s largest asset managers helped to validate Coinbase’s status as a leader in the crypto space. The top ten contributors to BUZZ Index performance gained an average of 39%, contributing over 41% of the Index’s gains during the Period.

Terms and Privacy Policy
Your Privacy Choices
Utah Privacy Notice
More Info

Recommended Stories