US Equity Futures Dip As GameStop Frenzy Grows

Shares of GameStop climbed more than 100% pre-market, after closing at 44% on Thursday. AMC Entertainment was up nearly 60% before the opening bell.

Robinhood Markets, a popular place for online traders, said Thursday evening it would reinstate some trades in stocks it had slowed down earlier. American Airlines has climbed nearly 10% before commercialization.

“The story of GameStop, where you have retail investors who are a new player in the market, [is] one that people cannot ignore, ”said Luc Filip, Head of Private Banking Investments at SYZ Private Banking. “There are critical links for hedge funds that are short on these stocks.” These investors sell further long positions to close losing short positions, which weighs down the markets as a whole.

Stock markets swung in January, rocked by headlines about the coronavirus vaccine supply and the tightening of lockdowns around the world. The Cboe volatility index, an indicator of stress in the markets, rose 14% on Friday and more than 50% in January.

The earnings season continued, with oil giant Chevron and construction equipment giant Caterpillar due to report ahead of the opening bell. Pharmaceutical company Eli Lilly and aerospace company Honeywell are also expected to release results early in the morning.

Skyworks Solutions,

a chipmaker that supplies Apple,

was up nearly 13% in pre-market trading after posting after-hours earnings Thursday that beat analyst estimates. Its board of directors also approved a $ 2 billion share buyback.

Megacap tech companies slipped ahead of the opening bell. Apple fell 1.2%, Microsoft fell 2.1%, and parent company Google Alphabet fell 1.8%.

“These hedge funds that have been hit, they will have no choice but to get rid of some preferred holdings in order to raise that liquidity,” to hedge their short positions, said Seema Shah, chief strategist at Principal Global Investors , adding that she would see any further decline as a buying opportunity for tech stocks.

Overseas, the pan-continental Stoxx Europe 600 index fell 1.2%. The comparatively slow rollout of vaccines by the European Union and recent supply delays are raising concerns about extended lockdowns and weighing on markets, investors said.

Swedish telecommunications company Ericsson jumped 7.7% after posting above-estimated profits and saying it gained market share. Meanwhile, Nokiaof

stocks listed in Finland rose almost 5%. The mobile phone company’s US-listed shares have been among those rocked by retail investors in recent days.

In Asia, most of the major benchmarks fell. The Shanghai Composite Index fell 0.6% and Japan’s Nikkei 225 fell 1.9%. South Korea’s Kospi index fell 3%, the largest daily decline in five months.

In bond markets, the yield on benchmark 10-year US Treasuries climbed to 1.071% from 1.055% on Thursday. The dollar strengthened with the WSJ Dollar Index rising 0.1% to its highest level in more than five weeks.

The U.S. Bureau of Economic Analysis will release the latest data on consumer spending at 8:30 a.m. ET. Economists expect it to fall in December for a second straight month due to an increase in virus cases, signaling a loss of momentum in the economy at the end of the year.

“We expect more caution from US consumers in the near term,” said Gero Jung, chief economist at Mirabaud Asset Management, adding that this would affect the economic recovery as consumer spending accounts for two-thirds of the proceeds. American gross domestic.

Write to Anna Hirtenstein at [email protected]