Dow futures rise 250 points as the stock market tries to shake GameStop angst

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MARKET SNAPSHOT

U.S. stock-index futures on Monday morning were trading solidly higher as the market attempted to recover from its worst weekly loss since October as worries about GameStop Corp., stemming from a retail trading frenzy in the videogame retailer and others, fueled a ripple of selling on Wall Street.

How are stock markets performing?

  • Futures for the Dow Jones Industrial Average were up 212 points, or 0.7%, to trade at 30,091.
  • S&P 500 index futures advanced 34.55 points to reach 3,739.75, a gain of 0.9%.
  • Nasdaq-100 futures were climbing 135 points, or 1.1%, at 13,046.75.

Stocks on Friday registered their worst weekly declines since the period ended Oct. 30. The Dow closed 3.2% lower for the week, the S&P 500 down 3.3% and the Nasdaq Composite finished with a weekly slide of 3.5%.

Monthly, the Dow lost 2%, the S&P 500 shed 1.1% and the Nasdaq Composite gained 1.7%.

What’s driving the market?

Stock-market investors are trying to bounce back from an epic short squeeze that gripped Wall Street and Main Street last week, and partly reflects worries about inflated stock valuations.

The three major indexes posting their worst week, and overall month, since October on Friday, as volatile trading in bricks-and mortar retailer GameStop and movie chain AMC Entertainment Holdings prompted fears that further forced selling in highly leveraged and heavily shorted areas of the market would put pressure on prices.

Video: Stocks set to rebound following worst week for the market in months (CNBC)

Stocks set to rebound following worst week for the market in months
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Last week, shares of GameStop soared 400% and AMC Entertaintment ended 277% higher and Koss Corp. rallied 1,816%, amid extreme trading volume and volatility that forced many brokerages to curb trading activity in certain names.

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“The mayhem on Wall Street has already attracted the attention of regulators and lawmakers but until action is taken, it is looking unlikely that the frenzy will settle down,” wrote Raffi Boyadjian, senior investment analyst at XM, in a daily research note.  

Indeed, last week’s moves compelled brokerages, including Robinhood Markets, to limit trading on its platforms. The wild trading in stocks targeted by individual investors also drew the attention of the White House, Congress and regulators, including the Securities and Exchange Commission.

Read: Robinhood slims restricted list to 8 stocks, but users can still only buy 1 share of GameStop

Meanwhile, the social-media community appears to have turned its attention to the $1.6 trillion silver market Silver has rallied in recent trading sessions after users on Reddit’s WallStreetBets forum posted about executing a “short squeeze” similar to ones credited with fueling GameStops surge.

Gains in futures also come amid a recent decline in U.S. COVID-19 cases, with newly reported coronavirus cases down Sunday from a day earlier, as were hospitalizations and deaths.

Investors continue to watch the progress of President Joe Biden’s proposed $1.9 trillion economic aid package. Hopes for aid, along with the Federal Reserve’s pledge to keep low-cost credit plentiful, have buttressed financial markets. CNBC reported over the weekend that a group of 10 Republican senators, in a letter, called on Biden to consider a smaller proposal.

In corporate quarterly results, around 100 S&P 500 companies were set to report earnings this week, including Amazon.com Inc. and Google parent Alphabet Inc. due Tuesday.

In economic reports, investors await a report from the Institute for Supply Management’s manufacturing index for January, which is due at 10 a.m. Eastern; a monthly report on construction spending for December also is due at the same time.

Which companies are in focus?

  • Shares of Thermo Fisher Scientific Inc. surged 2.7% in premarket trading after the health care diagnostics and therapies company reported a big earnings beat and revenue.
  • Northrop Grumman Corp. said Monday it has entered a $2 billion accelerated share buyback agreement with Goldman Sachs & Co. The defense company’s shares were down 2.2% before the bell.
  • Shares of Otis Worldwide Corp. were up 1.3% in premarket trading Monday, after the elevator and escalator maker reported fourth-quarter profit and sales that rose above expectations, and provided an upbeat full-year outlook.
  • Shares of Eaton Corp.  edged down 0.3% after the power management company announced an agreement to buy Cobham Mission Systems in a deal valued at $2.83 billion.

How did other assets perform?

  • Crude-oil futures rose 1% to $52.74 a barrel, on the New York Mercantile Exchange. In precious metals, gold futures climbed 1% to $1,868.10 an ounce.
  • The 10-year Treasury note yield was down a basis point to 1.083%. Bond prices move in the opposite direction of yields.
  • The greenback strengthened 0.3% against its major trading partners, based on the ICE U.S. Dollar Index.
  • The Stoxx Europe 600 index gained 1.4%, while the U.K.’s FTSE 100 rose 1.2%. In Asia, the Nikkei closed 1.6% higher and China’s CSI 300 index added 1.2% and the Shanghai Composite gained 0.6%.
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