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Squeeze Eases, Dollar Rises, Amazon, Alphabet Earnings - What's up in Markets

EconomyFeb 02, 2021 06:31AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- The squeeze on shorted stocks and silver eases, while Robinhood raises another $2.4 billion from shareholders to fund its collateral requirements. Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) report after the bell, while Exxon (NYSE:XOM) and BP (NYSE:BP) are out earlier. The dollar rises as U.S. stimulus talks progress and the Eurozone economy tanks, and OPEC’s technical experts pore over the data from the oil market. Here’s what you need to know in financial markets on Tuesday, February 2nd.

1. Unsqueezed

The short squeeze in a handful of stocks favored by retail investors continued to unwind in premarket, as data showed a further decline in net short interest in many of the names concerned.

By 6:30 AM ET, GameStop (NYSE:GME) stock was down 24% in premarket trading, after having lost 31% on Monday. Monday’s losses meant that it was already down more than 50% from its peak, and its premarket price is now only where long-term bulls such as GMEdd.com see its fair value under a bull case.

AMC Entertainment (NYSE:AMC) stock was likewise down 22% in premarket and BlackBerry (NYSE:BB) stock was down 6.8%, while silver futures, which had spiked to an eight-year high on Monday, were down 5.7% at $27.83 an ounce.  Elsewhere, online brokerage Robinhood said it had raised another $2.4 billion from shareholders to help it fund elevated collateral requirements from its clearing house.

2. Dollar rises as stimulus talks, Eurozone GDP underline growth differentials

President Joe Biden said he will press on with his $1.9 trillion spending plan after an inconclusive but “constructive” meeting with Republican Senators who want to trim the package.  The talks raised hopes that a bigger bill could pass with bipartisan support, easing fears that the package will be badly delayed or watered down due to GOP resistance.

The Congressional Budget Office had said on Monday it expects U.S. gross domestic product to return to its pre-pandemic peak by the middle of this year, after it updated its forecasts to reflect the new administration’s spending package.

The dollar index, meanwhile, hit a seven-week high as investors reassessed the relative near-term growth outlook for the U.S. vis-à-vis Europe and other developed markets after a very dovish Australian central bank statement. Eurozone GDP fell 0.7% in the fourth quarter as lockdowns returned to haunt the region. In year-on-year terms, GDP fell 5.1%, more than the 4.3% expected.

3. Stocks set to open higher; Big Oil reports early

U.S. stocks are set to push higher later, on the upward revision to U.S. growth forecasts and confidence about the progress of the administration’s spending plans.

By 6:30 AM ET (1130 GMT), Dow Jones Futures were up 266 points, or 0.9%, while S&P 500 Futures were up by a similar amount and futures on the NASDAQ, which had gained more than 2% on Monday, were up 0.8%.

On a day with little economic data of note in the U.S., earnings are likely to dominate news flow. Exxon Mobil is due to report for the first time after its tentative merger talks with Chevron  (NYSE:CVX) were disclosed, while BP earlier reported that its underlying profit fell to only $115 million in the fourth quarter.  Pfizer, United Parcel Service, ConocoPhillips(NYSE:COP), McKesson and Harley-Davidson are the other big names to report before the open.

4. Alphabet, Amazon expected to show rapid Cloud growth

The most eagerly-awaited earnings of the day come after the close, however.

Amazon, arguably the biggest winner of the pandemic as a result of the acceleration of trends toward online shopping and remote working, is expected to report a 37% rise in revenue to $116 billion, thanks to its cloud-hosting business AWS and the surge in U.S. online e-commerce.  Its operating costs, which have burgeoned as the company hired more to cope with higher demand, will also be scanned closely.

Also reporting is Alphabet, which is expected to show another strong quarter of growth for its own cloud-hosting business and for YouTube. Analysts expect a 15% rise in revenue to $52.9 billion, but only a modest 2.3% rise in earnings per share.

5. OPEC experts meet, API inventories due

Technical experts from the Organization of Petroleum Exporting Countries will meet to review the state of the global oil market, and are scheduled to deliver a recommendation to ministers on whether or not to adjust the bloc’s output. No change is expected, given that Saudi Arabia, the bloc’s largest producer, has already committed unilaterally to a cut of 1 million barrels a day for the next two months.

However, it’s not impossible that the group will recommend some tweaks to individual members’ quotas. OPEC Ministers, along with those of allies including Russia and Kazakhstan, are due to sign off on policy for the next month on Wednesday.

Elsewhere on Tuesday, the American Petroleum Institute will release its weekly estimate of U.S. crude oil stocks. Analysts expect a modest inventory build of some 367,000 barrels, offset by a slightly larger drop in distillate stocks.

Overnight, U.S. crude futures rose 2.4% to $54.83, a strong performance given the dollar's own rise, while Brent crude futures rose rose 2.3% to $57.62 a barrel

Squeeze Eases, Dollar Rises, Amazon, Alphabet Earnings - What's up in Markets
 

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Comments (6)
ANIMESH GAUTAM
ANIMESH GAUTAM Feb 02, 2021 8:06AM ET
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the 1percent doesn't retail traders to be organised , or to get rich so we can our tuition. 1percernt want to make slaves of us . I wish market crashes for this unfair trade set up
Joaquim Fonseca
Joaquim Fonseca Feb 02, 2021 7:47AM ET
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Nowadays everything you read, even in portals like this, you should take it with a grain of salt. You can see  the very low volume trades of GME (as an example) in pre-market here: https://www.nasdaq.com/market-activity/stocks/gme/pre-market-trades
VFor Vendetta
VFor Vendetta Feb 02, 2021 7:32AM ET
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Squeeze is not yet started. You all trying to make wide public drop the stock, but diamond hands.... =) Media outlets sold out to big money, knows since 1800s. Manipulators. You all deserve to be jailed for mass market manipulation support. oops, but the increased scrunity have to be applied not only to market participants, but also to media. infiltrate their transactions, interests, participation in donation activity, in non profits, the incomes of non profits, etc, etc. cmon sec, fed and other law enforcement bodies!
VFor Vendetta
VFor Vendetta Feb 02, 2021 7:22AM ET
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I love the stock, i hold ! trade paper for diamond brothers !
Ethan Whalen
Ethan Whalen Feb 02, 2021 7:05AM ET
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Of course the sqeeze went down premarket only the people agaisnt the 99% are trading it and theyw ant it down trading their low bolume they have a low low prices to short ladder attack and make the price go up if we hold it instantly goes up and + some in the coming day we just have to be strong
Kitty Monkey Lisa
Kitty Monkey Lisa Feb 02, 2021 6:46AM ET
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BB going to the moon.
Sari xx
Sari xx Feb 02, 2021 6:46AM ET
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lol
 
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