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Wall Street manages mostly higher open

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The main indices on Wall Street managed to open mostly higher on Monday morning as investors seem mostly upbeat ahead of a bumper week for earnings.

Shortly after the opening bell, the Dow Jones Industrial Average was down 0.15% at 30,948, however the S&P 500 was more positive, rising 0.33% to 3,854, while the Nasdaq also climbed 1.18% to 13,703.

Among those firms riding the positive wave in early deals was GameStop Corp (NYSE:GME), which soared 35.1% to US$87.80 as it continued to benefit from a wave of frenzied speculative buying.

Also on the rise was cinema chain AMC Entertainment Holdings Inc (NYSE:AMC), which jumped 33.3% to US$4.68 after it said it had raised US$917mln to help it stay afloat during the COVID-19 pandemic.

8:00am: Wall Street to open on a mixed note

Spread betting quotes are sending mixed signals ahead of the start of trading on Wall Street.

The S&P 500 is expected to open some 8 points higher at 3,849 but the Dow Jones Industrial Average and the Nasdaq Composite are both expected to start lower, although earnings announcements – of which there are set to be a lot this week – could change that.

The Dow is tipped to start 56 points lower at 30,941 and the Nasdaq is seen kicking off 50 points weaker at 13,494.

GameStop Corp (NYSE:GME) was the stock to watch in pre-market trading as it added to Friday’s hefty gains.

There is a battle going on between the bulls of the stock and the short sellers of a company disdainfully referred to as “the Blockbuster of video games”.

“Perhaps it’s the anticipation of more bumper results that’s driving this early week optimism, after Netflix got the season off to a strong start for the sector. A number of these names have thrived in the current environment and the expectation seems to be that we’re going to see more of the same,” said Craig Erlam at OANDA.

“Monday has little to offer on this front but with almost a quarter of the S&P 500 due to report this week, it’s a theme that’s likely to be a key sentiment driver in the coming days. Investors were a little more risk averse late last week but this week could get them back on track,2 he suggested.

The tech bonanza may be continuing but so is the coronavirus (COVID-19) pandemic, with the Johns Hopkins database reporting 130,000 new cases in the US last week, which encouragingly was 27% lower than the number of cases reported the previous Sunday.

“The trend rate of decline remains steady, with cases falling by about 22% per week. The seven-day average has fallen 32% from its peak, on January 8, and is now below its pre-Thanksgiving level. By the turn of next month, the US is on course to report its first day with fewer than 100K new cases since November 2,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“Test positivity continues to fall rapidly, averaging 11.2% over the past week, down from a peak of 16.8% in the week ended January 8,” he added.

“We doubt that the current level of restrictions is enough to keep cases falling towards zero, but over the next couple months it is reasonable to expect vaccination to start making a visible difference, initially by reducing the number of hospitalisations and deaths per case, because the most vulnerable people are being vaccinated first,” Shepherdson said.

Big-name earnings announcements are thin on the ground in the US today, with the situation much the same for macroeconomic data.

The Chicago Federal Reserve’s national activity index is due out at 1.30 UK time but I doubt many traders will be postponing their lunch for it. For the record, the expectation 

Four things to watch for on Monday:

  • This week is set to be a big one for earnings, however, Monday will be something of a calm before the storm with only a few big firms in the diary such as personal care products maker Kimberly-Clark Corp (NYSE:KMB), insurance firm Brown & Brown Inc (NYSE:BRO) and lawncare group Scotts Miracle-Gro Co (NYSE:SMG)
  • There may also be interest in any news from DNA sequencing company Oxford Nanopore Technologies, which is reportedly considering an IPO as its MinION sequencing device is increasingly in demand to track any new variants of the coronavirus
  • Meanwhile, shares in cinema chain AMC Entertainment Holdings Inc (NYSE:AMC) may also be eyed after the company raised around US$917mln in a bid to keep itself afloat during the pandemic
  • There is little in the macro diary to excite investors, although the Dallas Fed manufacturing index for January will provide some Texan flavour to the start of the week while a speech from European Central Bank head Christine Lagarde may draw some eyes across the Atlantic

Story by ProactiveInvestors


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