Elon Musk brings money and punch to US stock markets

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(Bloomberg) – The world’s richest man was all over the US stock market on Monday.

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By revealing that he had purchased part of Twitter Inc., Elon Musk sparked the social media platform’s biggest stock rally since its 2013 debut, with nearly every other growth stock lagging behind. those gains – and to boot, the Nasdaq 100 and the S&P 500 and even the Russell 2000 too.

“Here’s a guy who just put a lot of money back to work in the market,” said Michael O’Rourke, chief market strategist at Jonestrading.

Sentiment was also supported by Musk’s Tesla Inc., whose shares rose 5.6% after posting record first-quarter deliveries over the weekend, boosting investor confidence in the capacity. of the company to go through a series of disruptions.

“The headlines are positive and they’re driven by Musk and I think that’s helped the growth to thin out,” O’Rourke said. “There are investors who are licking their wounds and feeling a little better.”

The tech-heavy Nasdaq 100 stock index rose 2%, while an exchange-traded fund that tracks the social media sector gained more than 5%. Among the big progressives were Facebook parent Meta Platforms Inc. with a 4% gain and Snapchat parent Snap Inc. adding 5.2%. Pinterest Inc. jumped 10% and Twitter closed up 27% at $49.97.

Musk took a 9.2% stake in Twitter to become the platform’s largest shareholder, a week after hinting he could shake up the social media industry. The stake is worth about $2.89 billion, based on Friday’s market close.

“For a stock that has been significantly underheld, it’s a Cinderella story for the bulls that Musk got involved with Twitter,” said Dan Ives, managing director and principal equity analyst at WedBush Securities.

“Whether it’s Musk or another strategic bidder, it could really shake up the social media world. Musk isn’t just going to take a passive 9% stake and go home,” he said. declared.

Cathie Wood’s ETF ARK Innovation underscored the risk mentality that was stoked by Musk on Monday. The fund that invests in fast-growing companies like Block Inc. and Teladoc Health Inc. rose 4.4%.

best month

The moves added to a strong start for U.S. stocks in April, the best month for the S&P 500 in 25 years.

Hopes are high that equities will get another boost this month, even as U.S. companies begin to report damage to profit margins from decades-high inflation. Since 1997, the S&P 500 has posted an average return of 2.5% in April, according to data compiled by Bloomberg.

Read more: Best month for stocks now faces Fed and inflation

Still, not everyone shared Monday’s enthusiasm. US brokerage BTIG pointed out that cyclical stocks linked to the health of the US economy, including banks, homebuilders and transportation, are struggling against the broader stock market, raising questions about the durability of the last rally.

(Updates with Wedbush comments, details on Cathie Wood holdings from eighth paragraph)

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