Market Snapshot: Dow jumps 200 points, aims for rebound after worst stock-market selloff in 3 months

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U.S. stocks kicked off trading higher Thursday as investors focused on earnings reports and economic data following steep losses for major indexes on high trading volumes on Wednesday.

Investors continued to monitor a surge in shares of GameStop Corp. that underlined concerns about speculative excess. Meanwhile, shares of big technology stocks were lower in premarket trade after earnings late Tuesday from Apple Inc. AAPL, -2.14%, Tesla Inc. TSLA, -4.95% and Facebook Inc. FB, +0.81%.

What are major benchmarks doing?
  • The Dow Jones Industrial Average DJIA, +1.57% gained 284 points, or 0.9%, to 30,569.
  • The S&P 500 SPX, +1.39% were rose 30 points, or 0.8%, to 3,781.
  • The Nasdaq Composite Index COMP, +0.88% advanced 84 points, or 0.7%, to 13,354.

Benchmarks fell sharply on Wednesday, with the Dow dropping 633.87 points, or 2.1%, while the S&P 500 and Nasdaq Composite each dropped 2.6%. Volumes surged on Wednesday with more than 23 billion shares traded, the highest since May 2019, according to Dow Jones Market Data.

What’s driving the market?

Stocks opened higher Thursday, rebounding from the worst one day fall since October on Wednesday, as investors took heart from corporate earnings reports and data showing a slow economic recovery from the coronavirus pandemic.

“On balance, today’s numbers were in-line or better than expected with the job numbers particularly encouraging given the current state of the economy and lockdowns heading into next week’s monthly employment numbers,” Colin Cieszynski, chief market strategist at SIAWealth, told MarketWatch.

A reading of those seeking initial jobless claims in the week ended Jan. 23, fell by 67,000 to a seasonally adjusted 847,000, marking the lowest level in three weeks, but layoffs were still high early in 2021 as the economy wrestled with a winter surge in the coronavirus.

Separately, a report on U.S. economic growth, or GDP, showed that the economy grew at a modest 4% annual pace in the final three months of 2020.

Worries about excessive speculation were underlined by the surge in shares of GameStop GME, +16.10%, which has been the most heavily traded stock on Wall Street for two days, as part of a battle between an army of individual investors organized on platforms like Reddit and short selling hedge funds.

Wednesday’s equity market weakness also reflected fears that some hedge funds were scrambling to exit long positions in a bid to offset losses on shorts against stocks like GameStop and AMC Entertainment Holdings Inc. AMC, -38.24%, analysts said. GameStop shares were up another 32% in volatile premarket trade Thursday.

“The GameStop short squeeze saga has sparked worries that certain investment firms are rushing for the exit to obtain cash to nurse any painful losses they are enduring. Within the past 24 hours, the mood has changed a lot as there is now a feeling that stocks across the board are in for further losses as a cut-and-run mentality is being adopted by some dealers,” said David Madden, market analyst at CMC Markets UK, in a note.

While overshadowed by the GameStop saga, analysts said remarks Wednesday by Federal Reserve Chairman Jerome Powell underlining that the economy remains a long way from recovery and that some sectors already damaged by the coronavirus pandemic were experiencing another round of pain were also a drag on the market.

In other economic reports, December new home sales and the December leading economic indicators report are both due at 10 a.m.

Which companies are in focus?