US stocks ended mixed on Wednesday, with energy stocks among the biggest gainers, boosted by rising oil prices.
Energy stocks were among the biggest gainers, boosted by rising oil prices.
The Dow closed up a modest 0.1%, or 36 points.
The S&P 500 also rose 0.1%, but the Nasdaq Composite ended flat, falling just short of a new record high.
GameStop (GME), which had fallen earlier in the week from record highs, closed up 2.7%.
Weekly jobless claims will be released Thursday. The numbers will not be pretty.
Economists predict another 830,000 workers filed first-time applications for unemployment benefits last week. That would only be a modest decline from the 847,000 applications in the prior week.
The weekly claims numbers remain staggering high, even as we might be growing accustomed to seeing these big numbers every week. Initial claims in last week’s report were four times higher than in the same period last year, for example. And these figures don’t even include people filing for government help under the pandemic-specific programs.
Continued claims for benefits, which count workers who have filed for aid for at least two weeks in a row, are expected at 4.7 million, slightly down from 4.8 million in the week before.
The Department of Labor will release tomorrow’s jobless claims report at 8:30 am ET.
General Motors is the latest automaker to temporarily shut plants because of the shortage of semiconductor chips that has been causing problems across the auto industry.
The three plants will shutter for a week starting Feb. 8.
Automakers cut back computer chip orders early last year when the pandemic caused temporary plant closures and slammed the brakes on auto sales and production. So electronics manufacturers, who had strong sales during the pandemic, happily snapped up the excess chip supply.
But when car sales bounced back sooner than expected, it left the industry struggling with a chip shortage.
“Despite our mitigation efforts, the semiconductor shortage will impact GM production in 2021,” GM said Wednesday. “We are currently assessing the overall impact, but our focus is to keep producing our most in-demand products – including full-size trucks and SUVs and Corvettes.”
The three plants to be idled are the Fairfax plant in Kansas City, Kansas; the CAMI plant in Ingersoll, Ontario; and the San Luis Potosi plant in Mexico. Additionally, the Bupyeong 2 assembly plant in South Korea will operate at half of normal production next week.
The North American plants being idled all make SUVs, but only smaller models – not the full-size SUVs that GM wants to keep building. The Fairfax plant also makes the Malibu sedan.
The ADP employment report beat expectations this morning with 174,000 jobs added in January, injecting some optimism into the forecasts for Friday’s government jobs report.
But the better-than-expected data should be taken with a grain of salt, said Nela Richardson, chief economist at the ADP Research Institute.
Last month, the government’s jobs report recorded a loss of 140,000 jobs, driven by losses in the hospitality and leisure industry. So while an uptick in the jobs numbers is a good sign, “this is not close to where we need to be to see a quick rebound in the jobs market,” she said.
While lower income jobs are bearing the brunt of the jobs crisis, higher income earners haven’t seen job losses to the same extent, and that is taking its toll on wages.
On average salaries are rising, but not because people are generally making more money, but because lower income earners are not working, Richardson said.
Trends like that highlight how far the nation is from a recovered jobs market.
The GameStop (GME) frenzy is moving into the next phase, and that phase could be regulation.
Treasury Secretary Janet Yellen will hold a meeting to look into the GameStop phenomenon, but Allianz chief economic adviser Mohamed El-Erian told Alison Kosik on the CNN Business digital live show Markets Now. But he doesn’t expect much to come from it.
While GameStop shares are in the green today, some investors have been hurt by steep losses in the company’s share price over the past two days.
“My heart goes out to retail investors who bought on Friday and are now sitting on losses of 70%,” El-Arian said. “Who would have guessed that RobinHood would have come so close to a market accident?”
These investors couldn’t have controlled factors such as brokers restricting trades at the end of last week, pushing the stock price lower following an astonishing rally in the days before, he added. This particular phase of the Reddit-inspired frenzy might be over, but El-Erian expects technology will continue to be a disruptive force on Wall Street.
Now the attention moves onto regulation and what the US regulators will do as a result of the recent gyrations.
“We should all encourage the democratizing of finance, but we should make sure that people are well informed,” the veteran investor added. “We came very close to a market accident last week, we should take this very seriously.
Wall Street is a mixed bag today.
At midday, the major indexes are mostly pointing higher. Even the Dow, the laggard of the day, reclaimed some of its lost ground and is down 0.1%, or 21 points. The S&P 500 is up 0.3% while the Nasdaq Composite is 0.4% higher.
The small-cap Russell 2000 index, of which which notorious GameStop (GME) is a member, is down 0.3%. GameStop itself is up 5%, a comparatively modest increase for the stock that rallied more than 1,600% in January.
Treasury Secretary Janet Yellen asked for and received authorization from ethics officials to look into issues such as the Reddit-driven volatility on Wall Street, according to a Treasury official.
Yellen, who called for a meeting this week of US regulators to discuss the market volatility, previously disclosed making more than $7 million in recent years by giving speeches to Wall Street banks, major corporations and industry groups.
The authorization from Treasury ethics officials allows Yellen to work on broad issues that come up, not just the current market volatility, the Treasury official said.
Yellen’s fees include hundreds of thousands of dollars from Citadel, the hedge fund owned by Ken Griffin that recently bailed out a GameStop short-seller. Citadel Securities, also owned by Griffin, is a major source of revenue for Robinhood, the app that temporarily banned GameStop purchases.
Senator Elizabeth Warren is demanding answers from Robinhood about its ties to Citadel and other hedge funds.
The Treasury official said Yellen was not employed by the companies that paid her speaking fees and her interactions were limited to her role as a speaker.
Yellen can seek further authorization to work on matters involving a specific company she earned speaking fees from, the official said.
Less than an hour into the trading day, the euphoria of the open seems forgotten and all three major indexes are in the red.
The Dow is 0.3%, or 85 points, lower.
The S&P 500 and the Nasdaq Composite have given up their gains and are flat.
But maybe a quiet day is just what the doctor ordered?
GameStop (GME), which jumped at the opening bell, is up less than 1%.
America’s services sector fared better than expected in January. The Institute for Supply Management, which measures activity in the sector, recorded a jump in the services index last month.
The Purchasing Managers’ Index came in at 58.7, up from December and beating economists’ predictions. Any value over 50 denotes and expansion in the sector.
It was the highest reading since February 2019 and the eighth-straight month of growth.
But not every corner of the services sector is doing that well.
The k-shaped recovery is very real here: While the real estate, construction and warehousing sectors are growing, entertainment and recreation, educational services, retail and utilities all reported contractions in January.
Treasury Secretary Janet Yellen has called for a meeting of the nation’s top federal regulators in response to the Reddit-driven turbulence on Wall Street.
The summit is expected to include regulators at the Securities and Exchange Commission, the Federal Reserve, the New York Fed and the Commodities and Futures Trading Commission (CFTC).
The meeting comes as lawmakers demand investigations into the market turmoil and controversial trading restrictions implemented by free trading app Robinhood.
The meeting is expected to occur this week, according to a Treasury official.
An army of traders on Reddit sent GameStop (GME) shares spiking last month, causing massive losses for hedge funds that had bet against the company. The ripple effects helped drive US markets sharply lower last week.
That trend has reversed this week, with GameStop tanking and the broader markets rebounding.
US stocks started the day mixed on Wednesday. Investors have moved on from GameStop (GME) mania to focus on tech earnings and the big news of Amazon (AMZN) CEO Jeff Bezos stepping down.
Amazon stock opened 1.4% higher. GameStop, meanwhile, rose 22%.
Meanwhile, the ADP employment report showed much better-than-expected job gains for January, which could bode well for Friday’s government jobs report, even though the two aren’t correlated.
Well that was better than expected.
The ADP employment report for January showed 174,000 private sector jobs were added to the economy, beating economists’ expectations of 49,000 new jobs by quite a bit.
Mid-sized businesses gained the most jobs at 84,000.
The education and health sectors hired the most, followed by the professional and business segment and leisure and hospitality.
In December, the ADP report registered a loss of 78,000 jobs.
This bodes well for other employment data coming out this week. Even though the ADP report and the government official data aren’t correlated, experts keep a close eye on trends in the former.
The government’ official jobs report for January is due Friday morning at 8:30 am ET. Economists predict 50,000 jobs have been added, a partial reversal of the prior months losses. But the unemployment rate is expected to remain unchanged at 6.7%. It would be the third month in a row that the jobless rate has stayed flat, showing just how much the recovery has stagnated.
Hedge funds, investment bankers and other institutional investors are desperate to find the next GameStop – before it’s too late.
That’s why Thinknum Alternative Data quickly built and launched a tool that provides its hedge fund and investment bank clients a ranking of the most-mentioned stocks on WallStreetBets as well as the Stocks subreddit.
The tool gives sophisticated investors a way to avoid getting their short positions blown up – and the option to bet in tandem with retail investors.
US stock futures are on the rise again, showing Wall Street’s resilience even as bubble talk remains rampant. With GameStop fever and silver mania quieting, investors are focused on solid tech earnings and Amazon’s CEO transition.
Strong earnings reports from Amazon and Alphabet late Tuesday are helping give Nasdaq futures a boost, in particular. A number of other tech companies report earnings today, including PayPal, eBay and Qualcomm.
Stock indexes closed sharply higher Tuesday as Wall Street recovered from last week’s selloff. The Dow finished up 1.6%, or 476 points, and recorded its best percentage gain since October.
The addition of carne asada to Chipotle’s (CMG) menus boosted its fourth quarter sales, the company said in its earnings late Tuesday.
Same-restaurant sales rose 5.7% for the period ending December 31, helping the chain rake in $1.6 billion in revenue. Digital sales soared 177% compared to the same quarter a year ago, slightly below the 202% it grew in the third quarter.
Chipotle’s stock fell nearly 3% in premarket trading because its earnings slightly missed analysts’ expectations.
No matter what happens next to shares of GameStop and AMC or the price of silver, average Joes and Janes are now an undeniable force to be reckoned with on Wall Street.
The short squeeze last week that propelled GameStop (GME) and other momentum investments popular with the Reddit crowd now appears to be on hold. GameStop plunged more than 50% Tuesday while AMC (AMC), silver prices and silver mining companies also fell sharply.
That’s partly due to trading restrictions from Robinhood and other brokers on how many shares of volatile stocks like GameStop, AMC (AMC), Express (EXPR) and Nokia (NOK) that retail investors can purchase in a single stock at a time.
Amazon (AMZN) founder Jeff Bezos will step down from his role as chief executive later this year and transition to the role of executive chair, the company said. He will be replaced by Andy Jassy.
Bezos has been Amazon’s CEO since its founding in 1995. He oversaw its growth from an online bookseller into a $1.7 trillion global retail and logistics behemoth, which has also made Bezos into one of the world’s richest people.
Jassy has worked for Amazon since 1997 and currently serves as CEO of the company’s cloud business, Amazon Web Services, its biggest profit driver.
The company’s shares were essentially flat shortly after the market closed Tuesday. Amazon’s stock has grown nearly 69% over the past year.
Read more about the change here and read Bezos’ letter to Amazon employees here.
Google (GOOGL) is providing a deeper look into the financials of its cloud business, and it doesn’t look great.
Google Cloud posted an operating loss of $1.2 billion in the final quarter of 2020, 4% worse than a year earlier, the tech giant reported Tuesday. The unit lost $5.6 billion for the full year, an increase of nearly 21%.
The company’s overall business is doing just fine, however, with a net profit of $15.2 billion — up 43% from the same period last year — on revenues of nearly $57 billion, up 23% and higher than analyst estimates.
Stock of its parent company, Alphabet, jumped more than 6% in after-hours trading.
