| | | Market rebounds as short-squeeze mania halted
28-Jan-21 16:20 ET
Dow +300.19 at 30603.36, Nasdaq +66.56 at 13337.16, S&P +36.61 at 3787.38
briefing.com
[BRIEFING.COM] The S&P 500 gained 1.0% on Thursday in a rebound paced by all 11 of its sectors, although the benchmark index was up as much as 2.1% intraday. The Nasdaq Composite (+0.5%) and Dow Jones Industrial Average (+1.0%) had similar price action, while the Russell 2000 (-0.1%) closed lower.
Sector gains ranged from 0.3% (real estate) to 1.9% (financials).
The short-squeeze mania that undercut risk sentiment yesterday was tempered today after several brokerage firms placed trading restrictions on heavily-shorted stocks like GameStop (GME 193.60, -153.91, -44.3%) and AMC Entertainment (AMC 8.63, -11.27, -56.6%). The retracement in these stocks eased some concerns about funds selling long positions to cover their shorts.
Interestingly, GameStop was very briefly the largest component in the Russell 2000 before shares tanked in the morning. So, with normalcy seemingly restored for the time being, fundamentally-oriented investors presumably felt more comfortable in buying the dip amid some encouraging developments.
Namely, Apple (AAPL 137.09, -4.97, -3.5%) and Facebook (FB 265.00, -7.14, -2.6%) were among the many companies that reported better-than-expected quarterly results, and fourth quarter real GDP increased at an annualized rate of 4.0% (Briefing.com consensus 4.4%) despite a challenging macroenvironment.
Shares of Apple and Facebook closed sharply lower, but that didn't take away from the fact that Apple cleared $100 billion in quarterly sales for the first time ever or that Facebook posted its highest revenue growth rate since the second quarter of 2018. To be fair, FB did issue a cautious outlook for the second half of the year.
Tesla (TSLA 835.43, -28.73, -3.3%), McDonald's (MCD 206.82, -0.18, -0.1%) and Dow Inc. (DOW 54.38, -0.01, -0.02%) joined Apple and Facebook in negative territory following their earnings reports.
These negative reactions did hinder the rebound effort in the market, especially in the afternoon when the broad market started to lose some of its early steam. There might have been some caution surrounding the short-squeeze situation amid a wait-and-see mindset for tomorrow's price action and considering lawmakers want to investigate the situation.
Longer-dated Treasuries finished lower amid the positive outing in equities and lingering expectations for improved economic growth. The 10-yr yield increased four basis points to 1.06%, and the 2-yr yield increased one basis point to 0.12%. The U.S. Dollar Index decreased 0.1% to 90.52. WTI crude futures declined 1.0%, or $0.54, to $52.30/bbl.
Reviewing Thursday's economic data:
- Fourth quarter real GDP increased at an annualized rate of 4.0% (Briefing.com consensus 4.4%) following a 33.4% increase in the third quarter.
- The key takeaway from the report is that growth clearly moderated, but at the same time, it held up quite well in light of the concerns surrounding the election, the surge in coronavirus cases, the delayed passage of the $900 billion stimulus, and deterioration in the labor market. That should build some confidence in recovery potential as the year progresses, vaccination efforts improve, and pent-up demand is unleashed.
- Initial jobless claims decreased by 67,000 for the week ending January 23 to 847,000 (Briefing.com consensus 875,000). Continuing claims for the week ending January 16 decreased by 203,000 to 4.771 million.
- The key takeaway from the report is that initial claims improved; however, they still aren't a cause for celebration at the current level.
- New home sales increased 1.6% m/m to a seasonally adjusted annual rate of 842,000 in December (Briefing.com consensus 860,000) from a downwardly revised 829,000 (from 841,000) in November.
- The key takeaway from the report is that new home sales, which are counted when contracts are signed, moderated for the second straight month from the torrid recovery pace seen in the July to October period that ran at an average sales pace of 968,000. Higher sales prices are presumably contributing to the moderating pace of sales.
- The Conference Board's Leading Economic Index (LEI) increased 0.3% m/m in December, as expected. That increase followed an upwardly revised 0.7% increase (from 0.6%) for November.
- The key takeaway from the report is that the strength in component indicators was widespread, with seven of the 10 indicators making positive contributions.
- The Advance report for International Trade in Goods for December showed a deficit of $82.5 billion versus $85.5 billion in November. The Advance report for Retail Inventories for December increased 1.0%, and the Advance report for Wholesale Inventories for December increased 0.1%.
Looking ahead, investors will receive Personal Income and Spending for December, PCE Prices for December, the Q4 Employment Cost Index, the Chicago PMI for January, Pending Home Sales for December, and the final Univ. of Michigan Consumer Sentiment Survey for January.
- Russell 2000 +6.7% YTD
- Nasdaq Composite +3.5% YTD
- S&P 500 +0.8% YTD
- Dow Jones Industrial Average UNCH YTD
Market Snapshot
| Dow | 30603.36 | +300.19 | (0.99%) | | Nasdaq | 13337.16 | +66.56 | (0.50%) | | SP 500 | 3787.38 | +36.61 | (0.98%) | | 10-yr Note | -3/32 | 1.053 |
|
| | NYSE | Adv 2168 | Dec 954 | Vol 1.4 bln | | Nasdaq | Adv 2140 | Dec 1675 | Vol 9.6 bln |
Industry Watch
| Strong: Communication Services, Industrials, Financials, Energy |
| | Weak: Consumer Staples |
Moving the Market
-- Stocks trade higher in rebound bid
-- Short-squeeze mania cools down
-- Mixed earnings reactions, but results were mostly better than expected
-- Encouraging GDP data
|
Crude futures settle in the red
28-Jan-21 15:30 ET
Dow +463.49 at 30766.66, Nasdaq +146.55 at 13417.15, S&P +58.37 at 3809.14
[BRIEFING.COM] The S&P 500 is trading higher by 1.6%, while the Russell 2000 continues to underperform with a 0.6% gain amid weakness in the heavily-shorted stocks. GameStop (GME 241.89, -105.07, -31.2%) was very briefly the top component in the Russell 2000 today.
One last look at the S&P 500 sectors shows gains ranging from 0.7% (real estate) to 2.4% (financials). It's been a positive showing for the sectors for most of the day. Energy stocks have even rebounded despite the decline in oil prices.
WTI crude futures settled lower by 1.0%, or $0.54, to $52.30/bbl. |
|
