4:10pm: Meme stocks reign as Nasdaq hits new high
Meme stocks once again ruled the day by the close of trading Tuesday, experiencing significant gains alongside a broader rise in US equities.
The Nasdaq touched a new record high during Tuesday’s trading, finishing just a little off the record at 16,511 points for a 0.8% gain.
This marks the index's first record-setting performance since April 11th.
Elsewhere, the S&P 500 and Dow Jones Industrial Average climbing around 0.5% and 0.3%, respectively,
The day was once again dominated by meme stocks like AMC and GameStop seeing significant surges during the trading session, reflecting ongoing enthusiasm among retail investors.
Despite higher-than-expected wholesale prices in April, Wall Street remained largely unfazed, awaiting Wednesday's release of the Consumer Price Index for a more comprehensive gauge of inflation.
Fed Chair Jerome Powell characterized the Producer Price Index as "mixed," indicating that the central bank's next move is not expected to be a rate hike.
2.01pm: Wall Street mixed
The Dow Jones moved further into the red to sit 22 points lower at 39,408 come Tuesday lunchtime, though the S&P 500 and Nasdaq held gains of 46 and two points respectively.
Hotter-than-anticipated producer price index (PPI) data earlier in the day, showing a 2.2% year-on-year rise and 0.5% monthly jump in April, had looked to dampen rate cut hopes.
However, markets appeared reassured that the figures may not necessarily translate to another surprise in Wednesday’s all-important consumer inflation reading.
“The silver lining behind the disappointing April headline is that many of the PPI components which feed into the core PCE deflator rose only modestly,” Pantheon Macroeconomics economists said.
This includes auto insurance, up 0.1%, a 0.2% increase in homeowner insurance and flat prices for medical insurance, the group noted.
Markets are expecting consumer prices to have climbed by 3.5% in April, with core inflation seen subsiding to 3.6% from 3.8%.
Among companies, declines by Visa Inc (NYSE:V, ETR:3V64) and Walmart Inc (NYSE:WMT, ETR:WMT) appeared to be weighing on the Dow Jones, as reports emerged the latter was set to cut hundreds of jobs... Read more
Meme stocks held onto gains, with GameStop Corp (NYSE:GME) up 39.7% and AMC Entertainment Holdings (NYSE:AMC) climbing 33.7%, signalling the latest frenzy continued.
Alibaba Corp faced a blow though, falling over 7% after unveiling an 86% drop in profit over the first quarter... Read more
12.06pm: Wall Street mixed as consumer inflation awaits
A hotter-than-expected producer price index reading did not weigh too much on the Nasdaq and S&P 500, as both climbed into the afternoon.
Come midday, the Nasdaq was up 40 points at 16,429, while the S&P 500 sat one point higher at 5,222.
The Dow Jones faced worse fortunes though, moving 6 points lower and into the red at 39,424.
Producer prices (PPI) rose by 2.2% in the year to April, against 1.8% a month earlier, and by 0.5% on a monthly basis, higher than expectations for an increase of 0.3%.
However, analysts reassured that the hot figure may not spell too much bad news for Wednesday’s consumer price index (CPI) reading, given hopes for rate cuts by the Federal Reserve soon.
“One reason why PPI may not influence CPI is that companies’ pricing power could decrease if the economy slows,” XTB’s Kathleen Brooks explained.
“Downside surprises in US economic data have picked up in recent weeks, suggesting that the US economy could be losing momentum.
“This may limit the amount of price increases companies can pass onto consumers, which could weaken the relationship between PPI and CPI even more.”
On the company side, the meme stock revival looked increasingly set in stone as GameStop added 64.8% following Monday’s 74.4% gain.
Fuelled by the return of meme stock frenzy engineer Roaring Kitty to X, AMC Entertainment Holdings (NYSE:AMC) gained 58.1% too, after climbing 78% on Monday.
Heavily shorted stocks, such as BlackBerry Inc, Virgin Galactic Holdings Inc (NYSE:SPCE) and Beyond Meat Inc (NASDAQ:BYND) also climbed in the latest blow for hedge funds and pessimistic traders... Read more
9.47am: Meme stocks lead markets higher
Meme stocks GameStop and AMC Entertainment have led Wall Street higher on Tuesday, with broader equity indexes also in the green.
GameStop doubled in initial trades before easing back to a 63% gain at $49.58, which is a 195% increase over five days.
Movie theatre chain AMC has jumped 70% to $8.93, which is a gain of 180% over five days.
Trading platforms on both sides of the Atlantic are reporting big surges in retail investor interest.
Of the broader stock indexes, the Nasdaq Composite is at the front, up a more prosaic 0.2%, while the Dow Jones has gained 0.15% and S&P 500 climbed 0.1%.
9.10am: More hot inflation and Chinese EV tariffs
US wholesale prices jumped last month, which will strengthen views that the Federal Reserve will keep interest rates higher for longer.
The producer prices index rose 0.5pc in April, up from a revised 0.1% fall a month earlier.
Confirming reports from yesterday, the White House has announced it is hiking tariffs on Chinese imports.
"China’s unfair trade practices concerning technology transfer, intellectual property, and innovation are threatening American businesses and workers," the Biden administration said in a statement, adding that China is "flooding global markets with artificially low-priced exports".
In response to what it says is "China’s unfair trade practices and to counteract the resulting harms", President Biden has directed the US trade representative to increase tariffs on $18 billion of imports from China.
7.50am: Slow and mixed start expected
US stocks are set for a hesitant open, continuing the market style we have seen on both sides of the pond this week.
In futures markets, the Dow Jones is pointing to a 0.1% rise, the S&P 500 flat at 0.04% and Nasdaq 100 down 0.06%.
Yesterday saw the US stock indices mostly traded near the flat line before the Dow and S&P closed in negative territory, while the Nasdaq Composite rose 0.3%.
For the Dow this ended a nine-day winning run.
"The start of this week has seen a holding pattern ahead of potentially more exciting times to come over the next couple of days," said Jim Reid at Deutche Bank.
"Unless you've been living on Mars, you'll know that we have the US PPI release today, followed by the CPI tomorrow. You'll also likely be fully aware that the first three months of the year all had fairly strong inflation, and all beating expectations, so this is an important week."
A separate market report might be needed for the latest moves in US meme stocks.
GameStop Corp (NYSE:GME), the memeist of them all, has followed the surprise 74.4% jump yesterday to $30.45 with a bigger leap in pre-market trading, with a rocket-emoji surge of 119% to $66.58.
Similarly, AMC Entertainment Holdings (NYSE:AMC), which rose 78% on Monday to $5.19, has zoomed up 120% pre-market to $11.44.
The spark was the return of YOLO trader Roaring Kitty on social media via an uncaptioned sketch of a gamer leaning forward in his chair, which was later followed by a string of snippets from films and television shows hinting at his comeback.
Market analyst Neil Wilson at Finalto says: “We can assume a fair chunk of the move is short-covering action chasing the initial move up. Some hedgies will have had calls on their shorts.”
GAMESTOP SHORT SELLERS SET TO LOSE $1.2 BLN ON TUESDAY AT $48.75 PREMARKET, ORTEX SAYS
WITH TUESDAY'S STOCK SURGE, GAMESTOP SHORT SELLERS SET TO LOSE $2.5 BLN SO FAR THIS MONTH, ORTEX SAYS
— RedboxGlobal (@RedboxWire) May 14, 2024