U.S. Stock Futures Fall as GameStop Frenzy Builds
By Anna Hirtenstein
U.S. stock futures fell as retail investors buoyed GameStop and other shares, pointing to a volatile end to 2021’s first month of trading.
Futures tied to the S&P 500 declined 1.2%, suggesting a reversal in direction after a nearly 1% rise Thursday. Those linked to the Nasdaq-100 retreated 0.9%.
Shares of GameStop soared over 60% premarket, after closing down 44% Thursday. AMC Entertainment was up more than 30% ahead of the opening bell.
Robinhood Markets, a popular venue for online traders, said late Thursday it would reinstate some trading in stocks that it had curbed earlier.
“The GameStop story, where you have retail investors that are a new actor on the market, [IS] one that people cannot ignore,” said Luc Filip, head of private banking investments at SYZ Private Banking. “There are some critical links for hedge funds that are short on those stocks.” Those investors are selling other long positions to close out money-losing short positions, weighing down markets overall.
Stock markets have seesawed in January, buffeted by headlines about coronavirus vaccine supplies and tightened lockdown measures around the world. The Cboe Volatility Index, a gauge of stress in markets, rose 9% Friday and is up over 45% in January.
Earnings season continued, with oil major Chevron and construction equipment giant Caterpillar scheduled to report ahead of the opening bell. Pharmaceutical company Eli Lilly and aerospace firm Honeywell are also set to post earnings in the early morning.
Overseas, the pan-continental Stoxx Europe 600 fell 1.2%. The European Union’s comparatively slow rollout of vaccines and recent delays to supply are creating concerns about prolonged lockdowns and weighing on markets, investors said.
In Asia, most major benchmarks declined. The Shanghai Composite Index edged down 0.6% and Japan’s Nikkei 225 fell 1.9%. South Korea’s Kospi index retreated 3%, in the biggest daily drop in five months.
In bond markets, the benchmark 10-year U.S. Treasury bond yield held fairly steady at 1.050%, compared with 1.055% Thursday. The dollar strengthened, with the WSJ Dollar Index rising 0.2% to the highest level in over five weeks.
The Bureau of Economic Analysis in the U.S. will release the latest data on consumer spending at 8:30 a.m. ET. Economists expect it to have declined in December for the second straight month due to a rise in virus cases, signaling a loss of momentum in the economy at the end of the year.
“We expect more prudence from the U.S. consumer in the short term,” said
Gero Jung, chief economist at Mirabaud Asset Management, stating that this would affect the economic recovery as consumer spending makes up two-thirds of U.S. gross domestic product.
Write to Anna Hirtenstein at [email protected]
(END) Dow Jones Newswires
January 29, 2021 05:00 ET (10:00 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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