Traders on the trading floor of the New York Stock Exchange.
Source: The New York Stock Exchange
US stock futures fell during overnight trading on Thursday as Wall Street’s volatile week continued.
Dow futures were down about 40 points. S&P 500 futures fell 0.2% and Nasdaq 100 futures lost 0.15%.
On Thursday, the Dow Jones Industrial Average rose 300 points, thanks to gains in Disney, Intel and American Express. The S&P 500 climbed nearly 1%. Thursday’s rally follows the worst sell-off at the Dow and S&P in three months on Wednesday. The Nasdaq Composite closed 0.50% on Thursday.
Thursday’s rally was a reversal of recent equity weakness, fueled by market volatility spurred by speculative trading from private investors. Several e-brokers have taken steps to curb the deliberate buying of heavily shorted names, which allowed investors to take a breather from the remarkable, if seemingly synthetic, moves in names like GameStop.
However, shares of the brick-and-mortar game retailer and AMC Entertainment entered expanded trading Thursday after Robinhood said it would allow a limited purchase of some of the restricted securities on Friday.
Investors are concerned that if GameStop continues to rise, it could lead to greater losses in hedge funds, which in turn could lead to ripples in the market as these funds are forced to sell other securities in order to raise money. At the same time, there is concern that the GameStop mania is a sign of a larger bubble in the market and that the breakup could also create turbulence and hit private investors hard.
“From a regulatory perspective, we’ve seen a phenomenon of, let’s call it retail investors, massively entering new trading mechanisms,” James McDonald of Hercules Investments said on CNBC’s “Fast Money.” “We saw this during the Dotcom run-up and it resulted in the establishment of practices that were limited on the rules for day trading. There will be limits to the extent to which instructions or recommendations can be given, those rules will be applied and then the brokers will follow. “
After the bell on Thursday, strong corporate earnings continued to roll in. Payment giant Visa, Mondelez, Western Digital and Skyworks Solutions all rose in comprehensive trading after reporting better-than-expected profits and sales for their quarterly results.
Caterpillar, Chevron, Eli Lilly and Honeywell are reporting earnings for the bell on Friday.
In terms of vaccines, biotech company Novavax said on Thursday that its coronavirus vaccine was more than 89% effective at protecting against Covid-19 in its phase three clinical trial conducted in the United Kingdom.
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