4:15 pm: Markets recover from worst week since October
The Dow closed up 229 points, 0.8%, to end Monday at 30,211. The Nasdaq Composite gained 333 points, 2.6%, to 13,403, and the S&P 500 picked up 60 points, 1.6%, to 3,774.
Traders largely drove stocks higher after the market's worst weekly selloff since October, per CNBC.
GameStop Corp (NYSE:GME), which caught fire last week on the back of reddit-inspired traders operating en masse, saw its shares lose $100, more than 30%, to $225.
Instead, many retailers turned their attention to silver futures, which rose 8% to $29.08 per ounce.
12:45pm: US benchmarks head north
US stocks are higher at the mid-day point as traders appeared to become more confident after the declines of last week.
The Dow Jones Industrial Average added around 237 points at 30,219, while the S&P 500 gained over 57 at 3,771. The tech heavy Nasdaq advanced over 304 points to 13,375."
"Traders are cautiously buying up relatively cheap stocks following the declines seen last week," said David Madden, at CMC Markets in London.
"Nerves are still in existence due to the power wielded by the group of retail traders that boosted Gamestop, Blackberry and Bed Bath & Beyond last week, all those stocks are lower today."
Elsewhere, the US ISM manufacturing reading for January was 58.7, down from 60.5 in December and details showed that new orders dropped from 67.5 to 61.1 and that impacted the overall update. The prices paid metric, however, increased to 82.1, which could be a sign that inflation is on the horizon.
In London, FTSE 100 closed earlier up nearly 59 points at 6,466
10:10 am: Proactive North America headlines:
Algernon Pharmaceuticals Inc (CSE:AGN) (OTCQB:AGNPF) (FRA:AGW) poised to investigate psychedelic compound DMT as treatment for stroke
Australis Capital Inc (CSE:AUSA) (OTCMKTS:AUSAF) (FRA:AC4) acquiree ALPS inks deal to build a high-tech California greenhouse
Empower Clinics' Inc (CSE:CBDT:) (OTCQB:EPWCF) (FRA:8EC) Kai Medical Laboratory to deliver on-site COVID-19 testing for Dallas Market Center
Imagine AR Inc (CSE:IP) (OTCMKTS:IPNFF) (FRA:GMS1) brings on technology executive Masa Ishimitsu as advisor to help launch augmented reality platform in Japan
CytoDyn Inc (OTCQB: CYDY) partners with Chiral Pharma to register Vyrologix in the Philippines
Benchmark Metals Inc (CVE:BNCH) (OTCQB:CYRTF) welcomes latest drill results from AGB zone at Lawyers project, which could become open pit mine
Byrna Technologies Inc (CSE:BYRN) (OTCQB:BYRN) adds veteran marketing executive Luan Pham to its C-suite
WeedMD Inc (CVE:WMD) (OTCQX:WDDMF) (FRA:4WE) announces that its Color Cannabis branded products are now available in Quebec
DRDGOLD Limited (NYSE:DRD) (JSE:DRD) continues to benefit from higher Rand gold price as it reports profit boost for first half
Q BioMed Inc (OTCQB:QBIO) metastatic bone pain drug Strontium89 made available to 3,000-plus urologists in contract with group purchasing organization UroGPO
9:43 am; Wall Street starts higher
The main Wall Street indices managed to open on the front foot on Monday
Shortly after the opening bell, the Dow Jones Industrial Average was 0.84% higher at 30,235, while the S&P 500 climbed 1.08% to 3,754 and the Nasdaq rose 1.33% to 13,245.
Investors seem to be trying to shake off some of the anxiety caused by the volatility of the GameStop frenzy, which has seen the Reddit retail trader crowd seemingly flock to silver at the start of the week as their next target to go “to the moon”, although some have pointed out that any such rally in the price of the metal could be short-lived.
Meanwhile, Rupert Thompson, chief investment officer at Kingswood, has said the influx of retail investors looking to push up stock prices to levels that do not correlate with the fundamentals of a business “is classic bubble behaviour and brings back bad memories of the tech bubble 20 years ago”.
However, the CIO added that such occurrences were “all a symptom of the liquidity sloshing around the markets which is unlikely to be withdrawn any time soon”.
“There is still a mountain of cash on the side-lines, potentially available to drive markets higher. Importantly, central banks have no plan to start scaling back their QE programs any time soon. Fed Chair Powell was at pains last week to emphasise that it would tread very cautiously on this front, not least because the economy still badly needs supporting”, Thompson said.
7:50 am: Wall Street set to make mostly positive start
The US trading session on Monday is expected to show a rebound in stocks following Friday’s shake-out.
Spread betting quotes indicate the Dow Jones Industrial Average, which tanked to the tune of 621 points on Friday, will claw back 228 points of those losses to open at around 30,211.
The S&P 500, which slumped 73 points, is set to open recoup about half of those losses with a 35 point gain at 3,749 while the tech-heavy Nasdaq Composite is seen opening 24 points lower at 13,046.
Last week was the worst week for US markets since October but traders are apparently singing “Happy days are here again”, despite some iffy data from China that suggests the People's Republic’s economy is coming off the boil.
“The Caixin China Manufacturing PMI fell to a seven-month low, faster than expected by analysts, hinting that the only bright spot of the world economy could also succumb to the renewed Covid pressure on its economic activity. While the economic activity is normally slower into the Chinese New Year holiday, we could see a more-severe-than-usual slowdown in the run-up and during Chinese festivities, as Chinese population will not be travelling to see their loved ones this year, and that’s some 800 million Chinese who won’t travel, eat, drink and ‘gab bei’ together, and offer gifts to their families,” said Ipek Ozkardeskaya at Swissquote Bank
That may or may not be bad news for silver producers, not that those trading the shiny metal seem to be that bothered, as irrational exuberance appears to be in abundance in the commodities markets, with the most actively traded futures contract in silver up 11% or so.
Some pundits are suggesting this is the latest example of retail investors sticking it to Wall Street but Twitter is awash with Reddit users saying this is a smokescreen for the activities of the common or garden Wall Street wolves, and that Reddit users are not behind the spike in silver prices.
“In true wolf pack fashion though, the Reddit submariners have slipped under the waves and reappeared in another part of the financial shipping lanes. This time the convey in question is the silver market, where the call to arms on the SS Silver ETF has seen silver jump 6.0% this morning in Asia, and rally nearly 13.0% over the last three sessions,” said Jeffrey Halley at OANDA, using a “submariner” metaphor to set up a truly groan-inducing pun (in the next paragraph).
“The Reddit wolf pack should tread more carefully here, though. Nelson Bunker Hunt and his brothers deployed the same strategy. While bearing fruit at first as silver hit $50.00 an ounce, their attempts to corner the silver market came to a gruesome end in 1980. Silver plunged, as did the brothers' fortune. With a large physical off-exchange market, and a lot more liquidity theoretically, then the sparely traded stocks dallied with so far, the retail wolf pack is in dangerous waters. The wolves of Wall Street may well be luring them into a trap in their Bunker Hunt for Reddit October.”
Marshall Gittler of BDSwiss has also been musing over retail investors’ apparent new-found interest in silver.
“When the wallstreetbets crowd talks about attacking the silver shorts, I don’t know who they’re talking about – only the producers are short in the futures market, and they’re normally short as they’re selling their production ahead to lock in prices,” he noted.
Connor Campbell has noted that although there are pro-silver posts on WallStreetBets, “the ‘top post’ on the subject is against the trade, claiming that by ‘going long on silver, you would be directly putting money into the pockets of the EXACT HEDGE FUNDS ON THE OTHER SIDE OF $GME’. The same poster also stated that the short squeeze was ‘a hedge-fund co-ordinated attack so they can keep fighting the $GME fight’.
Returning to the subject of purchasing managers’ indices (PMIs), the US manufacturing PMI for January is due out this afternoon, with economists expecting the final reading to be unchanged at 59.1.
The ISM (Institute of Supply Management) manufacturing PMI for January is expected to dip to 60.0 from 60.5 previously while the ISM prices paid reading is expected to slide to 75.5 from 77.6.
“In the US, the Institute of Supply Management (ISM) version of the manufacturing PMI is expected to fall slightly, which would be in contrast to the 2-point rise in the Markit version of this index; however the actual numbers are quite close so I’m not sure the different direction is significant – either way, US manufacturing remains in expansion,” pronounced Gittler.
Three things to watch for on Monday:
- In earnings news, investors will be eyeing shares in scientific instruments maker Thermo Fisher Scientific Inc (NYSE:TMO) after its quarterly numbers beat market expectations
- Other companies in the earnings diary include biotech Vertex Pharmaceuticals Inc (NASDAQ:VRTX) and elevator maker Otis Worldwide Corp (NYSE:OTIS)
- The key macro news at the start of the week will be US manufacturing PMI data for January as well as US construction spending data for December