12:15 pm: GME short sellers down nearly $20 million
The Dow tumbled 422 points, 1.4%, to 30,215 at midday. The Nasdaq Composite fell 136 points, 1%, to 13,200, and the S&P 500 slid 47 points, 1.2%, to 3,740.
Institutional and individual investors alike are tethered to every movement of GameStop Corp (NYSE:GME) and others. Incredibly, GME short sellers are down nearly $20 million, according to data from S3 Partners.
“Fear is running through the equity markets again as some trading apps have relaxed restrictions on certain stocks that have experienced colossal volatility recently, like Gamestop,” CMC Markets UK analyst David Madden wrote Friday. “There are concerns that we could see frenzied trading again by retail players in selected stocks and that could renew fears that some hedge funds might adopt a cut and run policy, hence why equity markets are lower across the board.”
GameStop, the stock every trader has an eye on, is up 88% to $370.50. The video game retailer saw its shares get as high as $483 Thursday afternoon before closing that same day at $193.60.
10:05 am: Proactive North America headlines
Bragg Gaming Group Inc’s (TSX:BRAG) (OTCMKTS:BRGGF) ORYX division enters Czech and Slovak markets via SYNOT Group partnership
Blackrock Gold Corp (CVE:BRC) inks agreement with Red Cloud Securities for a “bought deal” placement to raise gross proceeds of C$7,020,000
Victory Resources Corporation (CSE:VR) (OTCMKTS:VRCFF) (FRA:VR62) poised for short-hole drilling program at Loner once permit received
Great Panther Mining Ltd (TSE:GPR) (NYSEAMERICAN:GPL) (FRA:G3U) outlines US$13M worth of exploration plans for 2021
Esports Entertainment Group Inc (NASDAQ:GMBL) says VIE and SportNation brands now approved in 150 global jurisdictions
9:44 am: Wall Street starts lower
The main Wall Street indices were off to a slower start on Friday morning following some bleak US macro data.
Shortly after the opening bell, the Dow Jones Industrial Average was down 0.84% at 30,344, while the S&P 500 dropped 0.67% to 3,762 and the Nasdaq fell 0.46% to 13,276.
The decline in the markets followed data that showed US consumer spending dropped in December by 0.2%, the second month in a row the figure has fallen as pandemic-related restrictions continued to weight on consumer buying activity.
Despite this, the fall was less than the 0.4% analysts had predicted and better than the 0.7% fall suffered in November.
Meanwhile, shares in GameStop Corp (NYSE:GME) was off to another blinder, opening at US$345 compared to its previous close of US$193.60 as the Reddit-inspired rally showed no signs of slowing down.
7:52 am: Wall Street to head lower
After bouncing back yesterday, US markets are expected to give back a chunk of those gains today.
Spread betting quotes indicate the Dow Jones Industrial Average will shed 153 points to open at around 30,450. The broader-based S&P 500 is expected to dive 24 points to 3,763 and the Nasdaq Composite to tumble 258 points to 13,079.
No US market report seems complete these days without a mention of GameStop Corp (NYSE:GME), the stock that has become a stock market football.
The stock is up 60% in pre-market trading after plunging 44% yesterday after the trading app Robinhood put restrictions on trading the shares. Today’s movement is, of course, on the back of zero corporate news flow from the company.
There have, however, been some earnings updates from big names such as Colgate Palmolive, Honeywell and Eli Lilly.
Honeywell’s fourth-quarter adjusted earnings per share (EPS) of US$2.07 topped the consensus forecast by seven cents.
Colgate-Palmolive shares eased in pre-market reading after it said it expects high levels of uncertainty in 2021 and volatile raw material prices.
Eli Lilly edged higher in screen-based trading ahead of the bell after its sales and profit numbers topped analysts’ forecasts.
The drugs company has delivered 950,000 doses of bamlanivimab, its treatment for the coronavirus (COVID-19) to the US government, and has agreed to deliver another 500,000 doses before the end of the quarter.
Talking of which, the Johns Hopkins database reported 165,000 new US COVID-19 cases yesterday, down 14.5% from Thursday last week.
“This is the fourth straight sub-20% decline, following a week in which cases fell by 22%. Cases are still falling quite quickly, but if the shift seen in recent days continues, new daily cases will level-off in mid-February at about 135K per day, down about 45% from the peak but still well above the peak seen in the second wave, last summer,” said Inah Shepherdson at Pantheon Macroeconomics.
“We have argued for some time that the current restrictions across the US are not strong enough to keep pushing cases down indefinitely. The tightening in many states and cities between October and December was significant, but no part of the US is under a UK-style lockdown, so it’s not realistic to expect US cases to keep falling,” Shepherdson asserted.
Turning to macroeconomic matters, thee US economic diary is a busy one today, according to Daiwa Capital Markets.
“The personal income and spending report for December will cast light on the monthly profile of consumer spending that underpins the weaker-than-expected lift in private consumption in Q4 that was reported in yesterday’s national accounts (spending will most certainly have declined in the month of September). The core PCE deflator for December will also be of interest, with the 1.4%AR rise in Q4 fractionally firmer than had been expected (explaining a portion of the downside surprise to real consumer spending),” Daiwa said.
“Today will also bring the Employment Cost Index for Q4 (likely to report modest growth given slack in the labour market) and pending home sales for December (of interest in light of the modest decline reported in the previous three months). In addition, we will also receive the Chicago PMI for January and the final result of the University of Michigan’s consumer sentiment survey for January,” it added.
Three things to watch for on Friday:
- Big names in the earnings diary for Friday include oil giant Chevron Corp (NYSE:CVX), while investors will also be eyeing shares in pharmaceutical group Eli Lilly & Co (NYSE:LLY) and digger maker Caterpillar Inc (NYSE:CAT) after earnings from both beat expectations
- In the macro calendar, US personal incomes for December will be eyed as well as the Chicago PMI data for January and Michigan consumer confidence numbers for the first month of 2021
- Bitcoin is also likely to draw attention after a Twitter endorsement from Elon Musk sent the price surging 16.4% to around US$36,824 on Friday morning
Story by ProactiveInvestors
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