Here are the top news, trends, and analysis investors need to get their trading day started:
1. Futures fall when tech stocks come under pressure
Traders on the floor of the New York Stock Exchange.
Source: The New York Stock Exchange
US stock futures were lower Thursday, a day after the Dow, S&P 500 and Nasdaq saw a sharp 2% decline. Concern about increased speculative trading activity related to the near-term GameStop increased. Dow futures were slightly higher on Thursday, but Nasdaq futures were lower due to weakness from Apple, Tesla and Facebook after the gain. On Wednesday, the Dow, S&P 500 and Nasdaq continued to move away from record highs earlier this month. The Dow and S&P 500 turned negative for 2021, but the Nasdaq remained nearly 3% higher for the year to date.
The government just released two key economic reports: gross domestic product and weekly unemployment claims. Fourth quarter GDP rose 4%, slightly below estimates. Initial jobless claims for the week ending January 23 were still elevated Covid levels of 847,000, but less than expected.
2. GameStop rises again after being immersed overnight
GameStop store signage can be seen in New York City on January 27, 2021.
Michael M. Santiago | Getty Images
GameStop shares surged again to around $ 500 on the Thursday prior to entering the market as the Reddit-driven retail momentum continued to accelerate. The stationary video game retailer’s stock was able to offset losses in overnight trading and suddenly rose by over 45%. The move followed a high volume rally of more than 130% on Wednesday and increased earnings to 466% since the start of the week. The stock was worth about $ 40 a week ago. A few months ago it was worth about $ 6.
3. American Airlines Stock Rises More Than 45%
A person walks at Reagan National Airport prior to Thanksgiving in Arlington, the United States, on Nov. 25, 2020.
Hannah McKay | Reuters
Major airlines reported quarterly results ahead of the opening bell, with stocks of severely shortened Americans rising more than 45%, despite a record loss in the fourth quarter and facing difficult months ahead as new travel restrictions and slow vaccine rollout cloud hopes on a short-term recovery.
Dow’s McDonald’s earnings and sales for the fourth quarter were below estimates. However, the fast food chain announced that US sales in the same store rose 5.5%, which credits marketing investments and promotional activities during the pandemic. In premarket trading, the shares were slightly lower.
4. Tech stocks are under pressure after earnings
Apple CEO Tim Cook unveils the new iPhone 12.
source
Apple, Tesla and Facebook stocks were lower on the fore market the morning after the tech giants reported quarterly results. In the case of Apple, whose shares are up more than 80% in the past 12 months, stocks could take a breather despite the company’s most profitable quarter.
Facebook beat estimates in quarterly earnings and sales, but the stock was essentially unchanged in the pre-market after the company said Apple’s proposed privacy changes may make it harder for Facebook to target users with ads. Facebook shares rose 26% at close of trading on Wednesday last year.
Tesla’s quarterly results fell short of estimates, even though sales exceeded expectations. Soaring inventory, which had grown over 670% in the past 12 months, came under pressure after the company failed to set a clear vehicle delivery target for 2021.
5. The Fed doesn’t seem to be concerned about the manic trading
Federal Reserve Chairman Jerome Powell speaks during a virtual press conference in Tiskilwa, Illinois, United States on Wednesday, December 16, 2020.
Daniel Acker | Bloomberg | Getty Images
Some market professionals see the frenzied short squeeces in GameStop and other stocks as a sign of bubble formation, but the Federal Reserve doesn’t appear to be, and because of this, investors expect asset prices could continue to rise. Fed chairman Jerome Powell was asked at his press conference on Wednesday about the potential of Fed policies to fuel bubbles in markets and housing. Powell stated that the Fed had to use its extraordinary policies to help the economy with more than 9 million unemployed people.
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