NEW YORK, Jan 28 — The Dow and the S&P 500 slid more than 1 per cent yesterday as Boeing slumped on posting a record annual loss, while declines were exacerbated by hedge funds selling off long positions to cover a short squeeze sparked by a sharp rally in GameStop and AMC.
Shares of videogame retailer GameStop Corp and movie theatre operator AMC Entertainment Holdings Inc each more than doubled yesterday as amateur investors again piled into the stocks, forcing short-sellers such as Citron to abandon their losing bets.
“As weird as that may sound, what is partially responsible for what’s going on today in the market is that there’s a lot of selling going on to raise cash to cover some of these big shorts that are just getting pummeled,” said Sean O’Hara, president of Pacer ETF Distributors in Malvern, Pennsylvania.
Focus later in the day will be on the Federal Reserve’s statement after a two-day policy meeting. The central bank is expected to keep monetary policy locked in crisis-fighting mode, with investors also looking forward to relief from ongoing vaccination programmes and new fiscal spending plans.
Meanwhile, Boeing Co fell 3.1 per cent and was among the top drags on the Dow Jones Industrial Average after the planemaker took a hefty US$6.5 billion (RM26.3 billion) charge on its all-new 777X jetliner due to the Covid-19 pandemic and the aftermath of a two-year safety crisis over its 737 MAX.
In a week packed with quarterly earnings from mega-cap companies, Microsoft Corp rose 1.9 per cent after its results as the software maker continues to benefit from remote working and learning trends globally.
Microsoft’s results set a positive precedent for other technology-related companies including Apple Inc, Tesla Inc and Facebook Inc, which are set to report quarterly numbers later in the day.
These heavyweight majors have recently come back into favour after blowout results from streaming giant Netflix Inc, and as investors dumped economy-linked banks, energy and small-cap stocks.
However, concerns about heightened stock market valuations, raging coronavirus cases and any potential disruption to vaccine rollouts have spooked investors about a pullback and increase in volatility in the near-term.
Shares of Apple were up 0.2 per cent by mid-day, while Tesla and Facebook were down 0.6 per cent and 2.4 per cent, respectively.
The CBOE Market Volatility index, often used as a gauge for investor anxiety, rose 5.63 points, hitting its highest since January 4, the day before the Georgia runoffs.
By 12.32pm ET the Dow Jones Industrial Average was down 371.41 points, or 1.20 per cent, at 30,565.63, the S&P 500 was down 61.96 points, or 1.61 per cent, at 3,787.66, and the Nasdaq Composite was down 177.04 points, or 1.30 per cent, at 13,449.03.
Walgreens Boots Alliance Inc jumped 4.9 per cent after the drugstore chain named the outgoing chief operating officer of Starbucks, Roz Brewer, as its CEO.
Declining issues outnumbered advancers 3.41-to-1 on the NYSE and 3.71-to-1 on the Nasdaq.
The S&P index recorded 25 new 52-week highs and no new low, while the Nasdaq recorded 131 new highs and 19 new lows. — Reuters
