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Market News

29 Jan 2021 | 11:54

US pre-open: Futures in the red as volatile week for stocks draws to a close

(Sharecast News) - Wall Street futures had stocks opening lower ahead of the final's day trading in what has been a volatile week for markets. As of 1245 GMT, Dow Jones futures were down 0.54%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.62% and 0.83% weaker, respectively.

The Dow closed 300.19 points higher on Thursday, cutting into heavy losses recorded the day before.

Shares in GameStop were again in focus prior to the open on Friday after Robinhood limited buying of the stock and other heavily shorted names after it raised more than $1.0bn from existing investors overnight to ensure it had the capital required to continue trading.

Market participants are concerned that if GameStop shares carry on with their meteoric rise in such a volatile fashion, it could force hedge funds who short the stock to sell other securities in order to raise cash or even be a sign of a larger bubble set to burst and hit retail investors.

IG's Joshua Mahony said: "For traders this week appears to have brought about a complete change in the dynamic of what drives markets. While the focus has been upon a coordinated move in highly shorted stocks such as AMC and GameStop, there is a wider theme here where retail traders see their power to move markets in much the same manner as the hedge funds have done in the past.

"The 2020 market collapse appears to have quickened the pace of adoption for new traders, and there are plenty of signs to show that this new generation refuse to play the game according to prior norms. One thing is for sure, the Reddit generation have brought significant volatility for markets and provide yet another risk factor to consider for traders."

On the earnings front, Caterpillar beat quarterly profit estimates on Friday morning, while Chevron posted a fourth-quarter loss of $665.0m, a marked improvement on the $6.6bn loss reported for the same period a year earlier.

Eli Lilly earnings also beat estimates on the back of Covid-19 antibody sales, while Honeywell was in the green on the back of its own quarterly profit and sales beats.

Turning to the coronavirus pandemic, Novavax stated overnight that its Covid-19 vaccine was more than 89% effective in phase three clinical trials conducted in the UK.

The US has now recorded more than 26.33m total cases of Covid-19, claiming the lives of more than 443,769 Americans in the process.

On the macro front, December PCE figures will be published at 1330 GMT, while January's Chicago PMI will follow at 1445 GMT and the University of Michigan's January consumer sentiment report and pending home sales data for December were slated for release at 1500 GMT.
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