Here are today’s market moves:
S&P 500 up 0.98% to 3,787.38
Dow Jones up 0.99% to 30,603.36
Nasdaq up 0.50% to 13,337.16
Gold: $1,842.32
Bitcoin: $33,158
US10Y: 1.048%
What Happened?
U.S. stocks indexes rose on Thursday, with the S&P 500 up 0.98% and the Dow Jones up 0.99%.
Recently, investors have been buying shares of highly shorted companies, such as GameStop and AMC. The reason? Heavily shorted stocks can experience a “short squeeze” where the price goes up sharply because short sellers are forced to buy shares to exit their short positions. We saw an extreme case of this with GameStop this week.
Euphoria in these “short squeeze” stocks showed signs of cooling today, with GameStop shares down 44% and AMC shares down 56%.
Robinhood and Interactive Brokers Group decided to restrict the trading of GameStop, AMC, and other heavily traded stocks, causing an uproar on social media.
Robinhood reversed its decision by the end of the day, saying: “Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed.”
Analysts are advising investors to look beyond these unique situations in parts of the market and focus on earnings, which have been mostly strong.
Jobless claims totaled 847,000 for the week, less than the 875,000 expected by analysts.
Gross domestic product in the U.S. grew at a 4% annualized pace in the fourth quarter, below the 4.3% estimated by analysts.
Apple shares fell 3.5% to $137.09 after the company reported its most profitable quarter on record but did not provide clear revenue guidance.
Tesla fell 3.3% to $835.43 after the company missed analysts’ estimates on earnings.
What Else?
This Week
Monday: Earnings expected from Kimberly-Clark.
Tuesday: Earnings expected from 3M, General Electric, Microsoft, Starbucks, Verizon, and Texas Instruments; Data on U.S. home prices and consumer confidence.
Wednesday: Earnings expected from Apple, Facebook, and Tesla; FOMC monetary policy decision and briefing by Chair Jerome Powell.
Thursday: Weekly jobless claims and fourth-quarter GDP released; Earnings expected from Altria, Mastercard, McDonald’s, and Visa.
Friday: Earnings expected from Chevron, Caterpillar, and SAP.