US stock market falls as GameStop frenzy builds

Shares in GameStop rose more than 100% after the market closed 44% on Thursday. AMC Entertainment was almost 60% higher than the opening clock.

Robinhood Markets, a popular spot for online traders, said late Thursday that it would resume some trading in stocks it had previously restricted. American Airlines climbed nearly 10% ahead of market.

‘The GameStop story, where you have small investors who are a new player in the market, [is] one that people cannot ignore, ”says Luc Filip, Head of Private Banking at SYZ Private Banking. “There are some critical links for hedge funds that do not have enough stocks.” The investors sell other long positions to close money losses short positions, which weigh the markets as a whole.

The stock markets rocked in January, with news of coronavirus vaccine stocks and intensified closure measures around the world. The Cboe Volatility Index, a measure of market tension, rose 14% on Friday and more than 50% in January.

The earnings season continued, with the oil-sized Chevron and the giant of construction equipment, Caterpillar, reporting back before the opening bell. The pharmaceutical company Eli Lilly and the airline Honeywell will also earn earnings early in the morning.

Skyworks Solutions,

a chip maker provided by Apple,

rose nearly 13% in trading on the foreground market after reporting earnings after hours beating analysts’ estimates on Thursday. The board also approved a $ 2 billion repurchase.

Megacap technology businesses slipped before the opening bell. Apple was down 1.2%, Microsoft was down 2.1% and Google’s parent company Alphabet was down 1.8%.

“The hedge funds that have been hit have no choice but to get rid of some favorite investments to raise that cash,” to cover their short positions, Seema Shah, chief strategist at Principal Global Investors, said. will consider any further declines as a buying opportunity for technological stocks.

Overseas, the pan-continental Stoxx Europe 600 fell 1.2%. Investors say the relatively slow deployment of vaccines and the recent delays in the European Union are a cause for concern.

Swedish telecommunications company Ericsson rose 7.7% after posting earnings that beat estimates and saying it had gained market share. Meanwhile, Nokiasay

the shares listed in Finland rose by almost 5%. The US company’s listed shares have been among retail investors for the past few days.

In Asia, most important benchmarks have declined. The Shanghai Composite Index fell 0.6% and Japan’s Nikkei 225 fell 1.9%. South Korea’s Kospi index fell 3%, the biggest daily drop in five months.

In the bond markets, the standard ten-year yield in US Treasury bonds rose to 1,071%, from 1,055% on Thursday. The dollar strengthened, with the WSJ Dollar index rising 0.1% to its highest level in more than five weeks.

The U.S. Bureau of Economic Analysis will release the latest consumer spending data at 8:30 p.m. ET. Economists expect it to decline for a second consecutive month in December due to an increase in virus cases, indicating a loss of momentum in the economy at the end of the year.

“We expect more consumer caution in the short term,” said Gero Jung, chief economist at Mirabaud Asset Management, which said it would affect economic recovery as consumer spending accounts for two-thirds of U.S. gross domestic product.

Write to Anna Hirtenstein by [email protected]