Tuesday, September 21, 2021

in-focus

U.S. stocks rally as day-trading frenzy collapses


Stocks were poised for their biggest rally in three months as the trading frenzy that fueled a surge in heavily shorted shares crumbled. Investors also sifted through a batch of corporate earnings ahead of results from giants Amazon.com Inc. and Alphabet Inc.

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All major groups in the S&P 500 rose, with financial, industrial and retail companies leading gains on Tuesday. Twenty-seven out of the 30 blue chips in the Dow Jones industrial average advanced. United Parcel Service Inc. climbed as the courier reported a surge in profit, while Exxon Mobil Corp. was up on a pledge to safeguard dividends following its first annual loss in at least 40 years. Meanwhile, the speculative trades popular with Reddit crowds crumbled, with GameStop Corp. and AMC Entertainment Holdings Inc. tumbling at least 39% as silver sank from an eight-year high.

The collapse of those trades that roiled the stock market last month has coincided with a sharp reduction in short interest after bearish investors appeared to cover their positions. While some indicators show the battle between Redditors and hedge funds may not be over, analysts cited a sense of more stability and diminished concern over contagion from any retail bubble as reasons for the equity rebound.

"There's optimism brewing underneath," said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. "The fact that markets have cooled down a bit with the retail-trading frenzy, that's giving a little bit of optimism. Anytime there's more stability to markets, there's a breath of relief of all investors."

She also cited prospects for more fiscal stimulus as another reason for the positive mood. The Senate on Tuesday will begin a process that would let Democrats pass President Joe Biden's $1.9 trillion proposal without Republican votes, Majority Leader Chuck Schumer said.

As stocks continued to push higher, Bank of America Corp. strategists came out with a warning about rising bullishness, saying that a sentiment indicator is close to hitting a "sell" signal -- a mark last reached shortly before the financial crisis. Meanwhile, Citigroup Inc. is growing concerned with elevated earnings expectations, noting that share prices may be ahead of themselves by about 10%.

These are the main moves in markets:

Stocks

- The S&P 500 climbed 1.7% as of 3:38 p.m. EST.

- The Stoxx Europe 600 Index increased 1.3%.

- The MSCI Asia Pacific Index rose 1.2%.

Currencies

- The Bloomberg Dollar Spot Index was little changed.

- The euro dipped 0.3% to $1.2019.

- The Japanese yen depreciated 0.2% to 105.10 per dollar.

Bonds

- The yield on 10-year Treasurys rose two basis points to 1.10%.

- Germany's 10-year yield gained three basis points to -0.49%.

- Britain's 10-year yield increased three basis points to 0.349%.

Commodities

- West Texas Intermediate crude climbed 2.3% to $54.78 a barrel.

- Gold sank 1.4% to $1,835.30 an ounce.

- Silver slid 8.6% to $26.55 per ounce.

Published : February 03, 2021

By : Syndication Washington Post, Bloomberg · Rita Nazareth, Claire Ballentine