Stock-market benchmarks were pulling back at Monday midday, led by losses in the blue-chip Dow as investors worried that speculative buying could drive equity valuations to a breaking point.
What are major benchmarks doing?
The Dow Jones Industrial Average
slid 180 points, or 0.6%, to around 30,820, after briefly falling more than 1%.
The S&P 500
edged 6 points lower, or 0.2%, to 3,835.
The Nasdaq Composite
flipped positive, up 25 points, 0.2%, to around 13,569, after establishing an intraday record near the open at 13,728.98.
Stocks ended mostly lower Friday but logged weekly gains, with the Dow rising 1.6% and the S&P 500 advancing 1.9%. The tech-heavy Nasdaq Composite ended Friday at an all-time high leaving it with a weekly rise of 4.2%.
What’s driving the market?
Stocks crumbled to start of the week, with early gains in tech shares evaporating in late morning action, amid concerns that valuations across Wall Street increasingly have become stretched. Investors say that while markets should still record additional gains this year, equities have been due for a short-term correction.
“Speculation leading to euphoria is clearly a sign that a correction is coming. Whether it starts tomorrow or two years from tomorrow is a guess,” said James Meyer, chief investment officer at Tower Bridge Advisors.
Analysts and traders pointed to retail investors driving heated trading and volatility in stocks like Gamestop Corp.
in the past few days, sometimes overpowering more institutional money managers and hedge funds.
Investors also have been preparing for a busy week of earnings reports, with roughly a quarter of the S&P 500 due to release quarterly results, including tech bohemoths Apple Inc.
and Facebook Inc.
Earnings of large-cap tech-related companies have been pegged to show continued gains from the stay-at-home environment due to the COVID-19 pandemic, said Richard Saperstein, chief investment officer at Treasury Partners.
Analysts also continue to eye prospects for additional fiscal stimulus as President Joe Biden pushes for a $1.9 trillion package, though it faces difficult negotiations in a Senate where Democrats have a slim majority.
Stimulus expectations have helped investors look past worries over potentially more contagious variants of the virus that causes COVID-19, as well as snags in vaccine distribution.
And the Federal Reserve will hold its first policy meeting of the new year on Tuesday and Wednesday. While no policy moves are expected, Fed watchers expect Chairman Jerome Powell and fellow policy makers to signal a cautious but optimistic outlook, while also reinforcing expectations the central bank won’t be quick to ease up on monetary stimulus efforts.
See: Stock-market bulls brace for major gut check as earnings, Fed and GDP loom
Which companies are in focus?
- Shares of videogame retailer GameStop Corp. surged 58%, after storming 51% higher on Friday to leave it up more than 240% so far this month. The most recent gains came after short selling firm Citron Research and speculative buyers organizing on Reddit clashed.
AMC Entertainment Holdings Inc.
shares jumped 27% after the world’s biggest cinema-chain operator said it had raised $917 million in debt and equity to help it get through a coronavirus-impacted winter.
Merck & Co. Inc.
shares were down 0.4% after the drugmaker said it was discontinuing development of its two COVID-19 vaccine candidates following disappointing trial results, and will instead focus on the development of two investigational therapeutic candidates.
World Wrestling Entertainment Inc.
shares fell 0.2% after it announced Monday it had agreed to license its content to NBC Universal’s new streaming service Peacock.
Shares of Kimberly-Clark Corp.
rose 4.4% after the consumer products company reported fourth-quarter profit and sales that beat expectations and announced a dividend increase and a new billion stock repurchase program.
Which assets are on the move?
The yield on the 10-year Treasury note
slipped 4.5 basis points to around 1.046%. Yields and bond prices move in opposite directions.
Crude oil futures
for February were down 0.3% to $52.14 a barrel, while gold futures
gained 0.4% to 1,864.60 an ounce.
The Stoxx Europe 600 index
fell 0.9%, while the UK.’s FTSE 100
tumbled 0.8%. Hong Kong’s Hang Seng Index
surged 2.4%, topping the key 30,000 level.
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, was up 0.2% on the day.