Business & Investment

Dow falls 600 points as a stress market for GameStop enthusiasm and vaccine news

While delayed deployment of the coronavirus vaccine has raised suspicion, volatile trading in batches of small, significantly short-circuited companies may reflect a speculative bubble across the wider market. The stock index fell on Friday afternoon amid concerns. The speed of economic recovery.

  • Dow Jones Industrial Average
    DJIA

    It dropped by about 600 points (2%) to a psychologically important threshold of about 30,000.

  • S & P 500
    SPX

    It traded at 3,712, down 74 points (2%).

  • Nasdaq Composite Index
    COMP

    It decreased by 285 points (2.1%) to about 13,051.

  • Small Cap Russell 2000 Index
    RUT

    It was 1.2% lower at 2,081.

stock Partially rebound On Thursday, the Dow rose 300.19 points, or 1%, from the fall of the previous session. The S & P 500 also rose 1% and the Nasdaq rose 0.5%.

This week, the Dow Jones Industrial Average, the S & P 500 and the Nasdaq Composite are all expected to fall by more than 3% each week. Russell 2000 is moving at a pace that causes losses of about 4.6% each week.

What is driving the market?

Equities are under pressure again as hedge funds cover short positions and reduce exposure to other equities to mitigate risk, and soaring prices in small groups of significantly shorted equities continue to deprive the market of oxygen. I received it.

“That’s all we’re talking about on the street,” Michael Reynolds, head of investment strategy at Glenmede, told MarketWatch: “Wider sentiment suggesting that this is beyond the wider market.” I haven’t seen it flash red, “he added.

GameStop GME Friday’s share price rose 32% after trading app Robin Hood said so Allow limited purchase of shares..Robinhood Restricted transactions GameStop Thursday and others were caught up in a wave of individual investor purchases inspired by the Reddit message board.

Robin Hood said late Thursday that he had raised more than $ 1 billion from existing investors to address cash demands as a result of trading frenzy. The New York Times reported.. According to the report, before raising funds, Robin Hood said Depository Trust & Clearing Corp. Utilized a line of credit to meet higher margin requirements from a central clearing house for stock trading known as.

Charles Schwab & Co.And its affiliate TD Ameritrade Both companies repeated We adjusted the margin requirements for the selected shares to ensure that our clients had sufficient assets to pay for their share purchases, but did not limit the options or basic purchase of shares.

read: Peterffy calls Robin Hood’s decision to allow a “limited purchase” of GameStop trouble: “I’m not comfortable”

“The market was distracted by the excessive volatility of a small number of stocks that no one cares about a week ago,” said David Donavedian, chief investment officer at CIBC Private Wealth, in an email. I’ve come. ”

“The idea that individual investors can work with institutional investors is just as interesting as the debate about what should be regulated and what should not be regulated,” wrote the investment manager.

“We’re still focusing on fundamentals rather than a surge in low-quality stocks right now, and we expect some positive factors to emerge in the coming months,” Donavedian said. Said.

This is because Washington has been keeping an eye on the situation. White House spokesman Jen Psaki postponed to the Securities and Exchange Commission on Friday when a reporter asked about GameStop and others’ major moves this week. She said the federal government I was working on “how” to respond.

Investors are also analyzing a wave of quarterly earnings reports, raising questions about the deployment and efficacy of new vaccines against more contagious strains of the pathogen, leading to a recovery from the COVID-19 pandemic. He has expressed concern that it may take longer than expected.

Johnson & Johnson
JNJ

We have released initial data from a phase 3 trial of COVID vaccine candidates. It appears to be 66% effective in preventing moderate to severe illness 28 days after vaccination, but says it is not very effective in dealing with new South African strains.

Daily new cases and hospitalizations from the third wave of the pandemic are beginning to decline across the United States, but at least 165,073 new cases were reported on Thursday. According to the New York Times tracker With 3,862 deaths, down from the more than 4,000 reported deaths in the last two days.

In economic data, the report showed Americans withdrew spending in DecemberFor the second straight month, a record increase in coronavirus cases has opened new cracks in the economy and hindered recovery.

US Treasury Secretary Janet Yellen again on Friday Called for prompt parliamentary action The $ 1.9 billion coronavirus bailout package proposed by the Biden administration said that measures were needed to ensure that Americans did not lose their ability to meet basic needs such as shelter and food.

in the meantime, The cost of adopting the average US workers rose 0.7% in the fourth quarter, but compensation has not yet returned to pre-pandemic levels, according to closely tracked labor cost measurements. Income in December increased by 0.6%. This suggests that consumers can still spend money after regaining confidence in the economy.Last January Reading at the University of Michigan Consumer Psychology Index It came in at 79, as opposed to the expectation that it would be stable at 79.2.

“In the short term, there was some softness in the data points. Steve Kiabaron, portfolio manager and equity strategist at Federaled Hermès, said the labor market was a bit depressed, but nothing terrible. No. I told MarketWatch.

“If nothing else is happening, investors will probably buy a dip,” Kiabaron said. Instead, he said investors remain grumpy about what happens with stocks in the short term.

Which company is paying attention to?

  • Stocks of stocks that are significantly shortage, Koss Corp..
    Kos,

    It increased by about 30%, AMC Entertainment Holdings
    AMC

    It increased by 37%.

  • Dow component Caterpillar Inc.
    cat

    Shares fell 1.1%, despite higher-than-expected profits from mining and construction machinery manufacturers in the fourth quarter and earnings in line with consensus.

  • Eli Lilly and Company
    LLY

    Shares fell 2.1%, despite pharmaceutical companies exceeding their earnings and earnings expectations for the fourth quarter. Recognize $ 850 Million in US Revenue for bamlanivimab, Pharmaceutical company treatment for mild to moderate COVID-19 with emergency use authorization.

  • Share Novavax Inc.
    NVAX

    A 60% surge after research showed the company’s proposed COVID-19 vaccine late Thursday There was almost 90% effect overallHowever, it is much less effective for new variants.

  • Juniper Networks
    JNPR

    Share fell 5.3% after computer network companies met earnings forecasts Exceeded earnings forecast..

  • Visa Inc.
    V

    At the end of Thursday, earnings and earnings expectations were exceeded Strong debit card and online shopping trends, And announced a new $ 8 billion repurchase program. The company’s share price fell 1.9% on Friday.

  • Share United States Steel Corp.
    X

    Down 4.5% after steel producers reported Better performance than expected What are the key profit indicators for the fourth quarter?

  • Share Johnson & Johnson
    JNJ

    After the company released Phase 3 data on COVID vaccines, it fell 3.8% to 66% efficacy.

What about other assets?

  • Oil prices fall on US benchmarks CL.1, + 0.40% $ 52.25 a barrel down 9 cents on the New York Mercantile Exchange.Gold futures GC00, + 1.27% It rose $ 9.10 (0.5%) to settle to $ 1,850.30 an ounce, marking the first rise in seven sessions.

  • Yield of 10-year government bond TMUBMUSD10Y, 1.077% It increased by 2 basis points to 1.07%. Yields and bond prices move in opposite directions.

  • ICE USD Index DXY, + 0.07% USD measurements on the baskets of six major rivals rose 0.1%.

  • Pan-European Stocks 600 Stock Index SXXP London’s FTSE 100 fell about 1.9%, while UKX, -1.24% It decreased by 1.8% on the day.

  • In Asia, stocks, Shanghai Composite SHCOMP, -0.63% Hang Seng Index in Hong Kong down 0.6% HSI, -0.94% Japan’s Nikkei 225 index fell 0.9% NIK, -1.89% It retreated 1.9%.

William Watts contributed to the report

Dow falls 600 points as a stress market for GameStop enthusiasm and vaccine news

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