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Dow Jumps as Banks Rally; GameStop Short-Squeezers Scatter

Stock MarketsFeb 02, 2021 04:07PM ET
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© Reuters

By Yasin Ebrahim

Investing.com – The Dow rallied on Tuesday, as signs of easing Covid-19 pandemic prompted bullish bets on cyclical stocks like financials in the wake of the fading momentum in the short-squeeze trade.     

The Dow Jones Industrial Average rose 1.57%, or 475 points. The S&P 500 was 1.35%, while the Nasdaq Composite jumped 1.56%. 

Financials, mostly banks, led the move higher, underpinned by rising U.S. government bond yields as the Covid-19 vaccine roll out continued and infection rates slowed. 

Bank of America (NYSE:BAC), and JPMorgan Chase (NYSE:JPM) jumped more than 3%, while Goldman Sachs Group (NYSE:GS) closed up 4%. Rising U.S. government bond yields tend to boost the net interest income that banks earn on their loan products.

Coronavirus infections remained below 150,000 for the fifth day in a row.

A slew of mostly positive earnings supported investor sentiment on stocks.

Pfizer (NYSE:PFE) raised its full-year earnings guidance and reported mixed earnings as earnings missed, but revenue topped Wall Street estimates in the fourth quarter. The drug maker said it expects to sell $15 billion worth of its Covid-19 vaccine this year and brought forward its  200 million U.S. production to May from July.

United Parcel Service (NYSE:UPS), meanwhile, topped quarter and earnings and revenue as the pandemic-fueled demand in online shopping boosted deliveries.

Harley-Davidson (NYSE:HOG) slipped 17% after reporting an unexpected loss in the fourth quarter as shipments fell short of expectations to a more than 20-year low. The company, however, has a five-year turnaround plan aimed at generating low double-digit earnings growth through 2025.

The shift to focus on earnings comes as the short-squeeze trade appears to have run out of steam. GameStop (NYSE:GME) plunged 60% even as Robinhood lifted restrictions on buying shares in the video game retailer.

AMC Entertainment Holdings (NYSE:AMC) slipped 41%, BlackBerry (NYSE:BB) fell 21%, and Nokia Corp ADR (NYSE:NOK) was down 7%.

Tech, meanwhile, is expected to come under further scrutiny after the closing bell as Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) report results.

Amazon.com’s high-margin cloud business, Amazon Web Services, will be one of the key takeaways for investors in the wake of an acceleration in the number of companies transitioning to the cloud.

“We believe there is ample room for upside to profitability in Q4, aided by lower-than-expected COVID-related expenses,” Wedbush said in a note.

Walt Disney (NYSE:DIS), meanwhile, was one of the biggest gainers on the Dow ahead of its quarterly results due later this week. Qualcomm (NASDAQ:QCOM), eBay (NASDAQ:EBAY) and PayPal Holdings (NASDAQ:PYPL) are also among the notable companies set to report earnings later this week.

In other news, Uber (NYSE:UBER) jumped nearly 7% after it announced a deal to acquire alcohol-delivery service Drizly for $1.1 billion.  Drizly will be incorporated into Uber Eats business, and the deal is expected to close in the first half of 20218

Dow Jumps as Banks Rally; GameStop Short-Squeezers Scatter
 

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Comments (6)
Jin News
Jin News Feb 02, 2021 5:15PM ET
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Retailers getting burned?
Roderick Adams
Roderick Adams Feb 02, 2021 4:46PM ET
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who's scattering? not me!
youssef elhar
youssef elhar Feb 02, 2021 4:46PM ET
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cut your losses before it's too late
youssef elhar
youssef elhar Feb 02, 2021 4:46PM ET
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cut your losses before it's too late
Bobster Bambino
Bobster Bambino Feb 02, 2021 4:39PM ET
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Robinhood gave hedgies an unfair edge
David Bennett
David Bennett Feb 02, 2021 4:39PM ET
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Hedgies here, hedgies there, hedgies everywhere! Mass hysteria, mass hallucinations
Hons Barrera
Hons Barrera Feb 02, 2021 4:34PM ET
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Damn, big time fake! We did not run out of steam, we have been restricted from buying!
Kanye East
Kanye East Feb 02, 2021 4:17PM ET
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fake news gme amc to the moon💎🙌
Zeke Smouse
Zeke Smouse Feb 02, 2021 4:16PM ET
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Gme to the moon 🚀🚀🚀
 
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