Stocks were moving sharply higher Thursday morning, a day after sinking to their worst loss since October amid lingering worries about the long-term economic damage from the pandemic.
Investors continued to closely watch the nauseating moves of stocks like GameStop and AMC, which have become targets of online retail investors that have sent their shares skyrocketing even as big hedge funds bet they will fall.
The S&P 500 was up 1.8% as of 11:05 a.m. Eastern. The Dow Jones industrial average was up 1.9% and the Nasdaq composite was up 1.3%.
Data showed the U.S. economy contracted at its sharpest pace since World War Two in 2020 as COVID-19 ravaged services businesses such as restaurants and airlines.
A separate report showed 847,000 more people likely filed jobless claims last week, strengthening views of a persistent labor market weakness.
Concerns about slowing momentum in economic recovery due to rising coronavirus cases, heightened stock market valuations, and uneven distribution of vaccine rollouts have kept investors on edge about a pullback and increase in volatility in the near-term.
American Airlines Group Inc surged 26.1%, becoming the latest stock to lead bumper gains for a series of social-media hyped stocks, broadening a battle between small-time traders and major Wall Street institutions that has shaken U.S. and European stock markets.t
The outsized moves of GameStop, AMC Entertainment and select other previously beaten-down stocks have caught the attention of traditional investors, but also smaller investors and the media. All have notched massive gains in recent days after gaining favor with an online community.
Gamestop was was down 24% after more than doubling in price the day before. The stock, trading at $264 a share, overnight was worth as much as $500 a share. Meanwhile AMC Networks was down a whopping 56%, after rising nearly 600% just this month alone. Trading in both stocks was temporarily halted in the morning for volatility, and the trading app Robinhood restricited trading in those two stocks and others that have been moving sharply in recent days.
Investors are also focusing on company earnings. More than 100 companies in the S&P 500 are scheduled to tell investors this week how they fared during the last three months of 2020.
Tesla shed 4.7% after the electric-car maker reported disappointing fourth-quarter results and failed to provide a clear target for 2021 vehicle deliveries.
Apple fell 2% after the iPhone maker posted a record quarterly profit, helped by big sales of iPhones and Apple Watches during the holiday season. Investors focused on the fact that Apple was conservative in its full-year outlook for 2021, which the company cited economic uncertainty and the pandemic as part of the reason for the forecast.
Meanwhile. hopes are high for President Joe Biden’s proposed a $1.9 trillion COVID-relief package, but worries are growing the plan might also be scaled back. Adding to caution, the Federal Reserve said Wednesday it would keep its low interest rate policies in place, but it also released a sobering assessment of the gradual recovery ahead.
“Investors will likely focus on the pace of vaccinations around the globe while also keeping an eye on the progress of President Biden’s fiscal rescue plan that may be facing some roadblocks in the U.S. Senate,” Prakash Sakpal and Nicholas Mapa, senior economists at ING, said in a report.
Markets had been meandering near record highs since last week as investors weighed solid corporate earnings results against renewed worries that troubles with COVID-19 vaccine rollouts and the spread of new variants of coronavirus might delay a recovery from the pandemic.
Concerns about slowing momentum in economic recovery due to rising coronavirus cases, heightened stock market valuations, and uneven distribution of vaccine rollouts have kept investors on edge about a pullback and increase in volatility in the near-term.
