Tesla is another case in point. The electric vehicle company sold off for a second straight session after its entry into the S&P 500. The back-to-back losses could be a sign that investors who bought the high-flying stock in anticipation of the historic event are cashing in.
With less than two weeks to go in 2020, the S&P 500 has gained more than 14% despite a rampant pandemic and severe economic downturn. Meanwhile, Tesla is still up 650% this year.
“We remain encouraged by the rapid rollout of the coronavirus vaccine and by the recent stimulus deal reached in Washington,” said Craig Johnson, Piper Sandler’s technical market strategist. “However, these catalysts have largely been discounted into the market’s record-high rally."
"The risk of uncertainty over how quickly they translate into meaningful economic improvement remains uncomfortably high," Johnson added.
