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Dow Rallies as Cyclicals Shine; GameStop Loses Mojo

Published 02/02/2021, 01:53 PM
Updated 02/02/2021, 03:15 PM
© Reuters.

By Yasin Ebrahim

Investing.com – The Dow rallied on Tuesday, driven by a rally in cyclical stocks on optimism over the vaccine rollout and mostly positive earnings ahead of major reports from Google and Amazon.

The Dow Jones Industrial Average rose 1.92%, or 580 points. The S&P 500 was 1.72%, while the Nasdaq Composite jumped 1.72%. 

Financials, mostly banks, led the move higher as bank stocks were supported by rising bond yields on bets for a faster recovery as the Covid-19 vaccine roll out continues amid slowing infection rates.

Bank of America (NYSE:BAC), and JPMorgan Chase (NYSE:JPM) jumped 3%, while Goldman Sachs Group (NYSE:GS) was 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  18% 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.

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

AMC Entertainment Holdings (NYSE:AMC) slipped 39%, BlackBerry (NYSE:BB) fell 20%, and Nokia Corp ADR (NYSE:NOK) was down 8%.

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 8% 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

Latest comments

Well if brokers actually let people buy..
GME didnt lose steam- GMEwas forced only to sell, without having the chance to buy
the old "Reddit" as won ...they felt menaced that they were no longer the sole orchestrators of collusion
I wish I could read.
We only know hold & buy, In all honesty I think retail owns the entire float.
$gme you want to see volume rise and consolidate like it did back mid January. wait for lower entry. looking at 60s or even 40s level imo.
Still only limited to buy 100 sh of GME. Price has dropped on extremely low volume. What a crooked racket.
¡GME es una burbuja que irá a la quiebra! ¡Grandes fondos te harán pedazos! Entiendas ¡No puedes vencer a Wall Street! ¡GME dejará de ser! ¡No sé que pueda ir en contra de la lógica! ¡Recuerda los tulipanes! ¡GME no tiene valor real! ¡Es solo bla, bla, bla, es solo humo! Muchos van diciendo que los fondos tienen que comprar para cubrir sus cortos, pero se olvidan que hay otros fondos que antes no tenían cortos y que ahora se quedan cortos para "molinar a los retails" las ventas contra los minoristas en estando en una burbuja es tan lógica para los grandes fondos que pueden mover al mercado. ¡simplemente no se puede vencer a todo Wall Street!
Hahah we are not smashed. Holding. Funk fake news.
Agreed. Holding
#metoo
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