Thursday January 28th

28-01-2021

S&P 500 futures rise slightly after a steep sell-off on Wall Street

U.S. stock index futures climbed slightly early Thursday following a sharp sell-off in the stock market the day before. S&P 500 futures traded 0.3% higher. Dow Jones Industrial Average futures rose 120 points. Nasdaq 100 futures were lower, falling 0.3% amid negative reactions to tech earnings the night before. Apple turned in its largest revenue on record at $111.4 billion in its fiscal first-quarter earnings report for fiscal 2021. Sales for every product category rose by double-digit percentage points. Shares of the tech giant, however, dipped 2% in premarket trading. Tesla dropped about 5% in premarket trading after the electric car maker posted worse-than-expected earnings for the latest quarter. The company also said it expects annual average delivery growth of 50% going forward. Shares of American Airlines surged more than 40% in premarket trading Thursday after the carrier posted better-than-feared quarterly results. The company, the most-shorted U.S. airline, saw it shares keep ripping higher as hedge funds and other short sellers rushed to buy shares to cut their losses. Wall Street suffered steep losses on Wednesday, with the S&P 500 and the Dow posting their worst day since October, as the speculative buying frenzy in heavily shorted stocks kept investors on edge. Some fear that hedge funds being squeezed could be forced to reduce their equity holdings to raise cash. “Short squeezes causing implosions in some hedge funds are joining SPACs, IPOs, and bitcoin as data points supporting a market bubble thesis,” Scott Knapp, chief market strategist at CUNA Mutual Group, said in an email. “This is a time for caution for investors.” Trading volume exploded amid the retail buying spree in the previous session with 23.7 billion shares changing hands, marking the heaviest trading day since at least 2007. On Wednesday, U.S. equity option volumes hit a record 24.5 billion shares and 57.1 million contracts, according to Piper Sandler. Brick-and-mortar video game retailer GameStop, a target on the “wallstreetbets” Reddit chat room, soared another 134% Wednesday, pushing its January gains to a whopping 1,744%. AMC Entertainment surged over 300% Wednesday alone, experiencing its highest volume day ever. GameStop was higher again in premarket trading, reversing earlier losses and soaring another 40% as the mania continues. AMC Entertainment was flat. “This market action is nothing more than another epic parabolic bubble that has been going on since the history of time,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note. “This is not investing. This is not planning for one’s retirement with a diversified portfolio. This is not prudent analysis of stocks... And these traders forget that buying a stock is buying a piece of a company but instead they are just speculating on a stock symbol in the ultimate game of hot potato.” On the data front, dross domestic product increased at a 4.0% pace in the fourth quarter, slightly below the 4.3% expectation from economists surveyed by Dow Jones. The number of first-time filers for unemployment benefits rose less than expected last week. Jobless claims totaled 847,000 for the week ended Jan. 23, the Labor Department reported Thursday. Economists polled by Dow Jones had expected first-time claims to total 875,000. Shares in Asia-Pacific fell on Thursday following an overnight plunge on Wall Street that wiped out the S&P 500′s 2021 gains and left it in negative territory for the year. Mainland Chinese stocks dropped on the day, with the Shanghai composite down 1.91% to 3,505.18 while the Shenzhen component declined 3.248% to about 14,913.21. Hong Kong’s Hang Seng index shed 2.55% to close at 28,550.77. Shares of airline Cathay Pacific plummeted 9.71% after the firm said Thursday it would issue convertible bonds worth 6.74 billion Hong Kong dollars ($869.36 million). In Japan, the Nikkei 225 declined 1.53% to close at 28,197.42 while the Topix index shed 1.14% to finish its trading day at 1,838.85. South Korea’s Kospi also fell 1.71% to end its trading day at 3,069.05. Oil slid in Asia morning trade on Thursday despite a huge drop in U.S. crude stock, as the strength in the U.S. dollar and fresh fuel demand worries due to travel curbs and delays with coronavirus vaccines weighed on prices. U.S. West Texas Intermediate (WTI) crude futures fell 18 cents, or 0.34%, to $52.67 a barrel, erasing Wednesday’s gain. Brent crude futures fell 6 cents to $55.76 a barrel, after losing 10 cents on Wednesday. Gold prices edged lower on Thursday as investors opted for the safety of the dollar after the U.S. Federal Reserve flagged concerns about the pace of recovery in the world’s largest economy. Spot gold eased 0.3% to $1,839.21 per ounce by 0042 GMT. Prices fell to their lowest since Jan. 18 at $1,830.80 on Wednesday. U.S. gold futures shed 0.5% to $1,835.90.