NEW YORK, Jan 28 — Wall Street stocks bounced early today following the prior session’s rout on a deluge of mixed earnings from large companies and data showing 2020’s historic drop in US growth.
Markets were also monitoring unusual lurches in a handful of stocks including GameStop and now American Airlines following a revolt by amateur investors organised over Reddit that has rattled Wall Street norms and challenged seasoned hedge funds.
About 30 minutes into trading, the Dow Jones Industrial Average was at 30,734.13. up 1.4 per cent.
The broad-based S&P 500 gained 1.2 per cent to 3,796.56, while the tech-rich Nasdaq Composite Index advanced 0.8 per cent to 13,373.83.
Several large companies reported results after yesterday’s session, which saw major averages dive more than two per cent amid worries over the coronavirus vaccine distribution and excessive equity valuations.
Both Apple and Facebook scored huge profit jumps, along with Tesla, which nonetheless missed earnings estimates in the fourth quarter. Facebook rose early today, while both Apple and Tesla declined.
Among other companies reporting, both Comcast and McDonald’s rose.
The Commerce Department said the US economy shrunk by 3.5 per cent last year, with the growth of 4.0 per cent annualised in the fourth quarter moderating from the torrid pace in the second and third quarters.
Shares of the handful of companies implicated in the Reddit-driven “short squeeze” were volatile early today, with GameStop up around 20 per cent and AMC Entertainment down nearly 30 per cent.
American Airlines, another target of short sellers, was the latest equity to get swept up in the phenomenon, jumping about 17 per cent.
“There is a lot of money being made by participants in these short squeezes (assuming they sell on the way up), but there is a lot of hurt waiting for those who don’t and forget that a buyer is needed for every seller,” said Briefing.com analyst Patrick O’Hare. — AFP
