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Wall St rebounds as earnings heat up, short worries cool

Stock MarketsJan 28, 2021 04:05PM ET
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© Reuters. FILE PHOTO: Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the NYSE in New York

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks closed higher on Thursday, bouncing from sharp losses in the prior session, thanks to a broad rally as earnings season got off to a strong start and fears lessened around hedge funds selling long positions to cover shorts.

Heavyweights, including Microsoft Corp (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) Inc, were among the biggest boosts to the S&P 500, a day after the three major U.S. indexes suffered their biggest daily percentage drop in three months.

Apple (NASDAQ:AAPL) reported holiday-quarter sales and profit that beat Wall Street expectations. However, shares of the iPhone maker fell after climbing about 7% to start the year.

With quarterly earnings season in full swing, market participants have looked to whether companies could justify high valuations, with the forward price-to-earnings ratio on the benchmark S&P index near 20-year highs at almost 22.7.

"By and large the surprises have been positive, even more so than typical and by and large companies are showing positive operating leverage where they are able to grow earnings a little bit faster than they are able to grow revenue," said Ellen Hazen, portfolio manager at F.L.Putnam Investment Management in Wellesley, Massachusetts.

"It is still early days where we are only a third of the way through the S&P but the surprises look more positive than usual and that bodes well as an outlook for the economy and for the markets."

Unofficially, the Dow Jones Industrial Average rose 300.75 points, or 0.99%, to 30,603.92, the S&P 500 gained 36.49 points, or 0.97%, to 3,787.26 and the Nasdaq Composite added 66.56 points, or 0.5%, to 13,337.16.

Shares in GameStop Corp (NYSE:GME) and AMC Entertainment (NYSE:AMC) Holdings Inc tumbled after a meteoric rise in recent sessions in a social media-driven trading frenzy that shook stock markets. Trading platforms, including Robinhood and Interactive Brokers (NASDAQ:IBKR), restricted trading in several stocks that soared this week, easing concerns about a ripple effect to the broader market.

"Trading platforms are not going to want to stick their necks out and be on the frontline of what they may see as a reckless war, in part, against the elite and the system of Wall Street that's being democratized by information and the social media," said Eric Schiffer, chief executive officer of private equity firm the Patriarch Organization.

Of the 159 companies in the S&P 500 that reported earnings through Thursday morning, 83% posted results that topped analyst expectations, according to Refinitiv data, well above the 76% beat rate over the past four quarters.

Facebook (NASDAQ:FB) fell in choppy trading despite soundly beating quarterly revenue estimates, while Tesla (NASDAQ:TSLA) lost ground after posting disappointing fourth-quarter results and failing to provide a clear target for 2021 vehicle deliveries.

But Comcast Corp (NASDAQ:CMCSA) jumped after it reported better-than-expected fourth-quarter revenue, as broadband demand continued to offset pandemic-related weakness in its theme park and filmed entertainment businesses.

A Commerce Department report showed fourth-quarter gross domestic product increased at a 4% annualized rate, in line with expectations, as the virus and lack of another spending package curtailed consumer spending, while a separate report showed 847,000 more people filed jobless claims last week, lower than the 875,000 estimate.

Wall St rebounds as earnings heat up, short worries cool
 

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Comments (16)
Oliven Santos
Oliven Santos Jan 28, 2021 4:47PM ET
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buy buy
Mike Chen
Mike Chen Jan 28, 2021 4:35PM ET
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Who owns the media? Fake news everyday
Nison Kay
Nison Kay Jan 28, 2021 4:28PM ET
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This is sick and disgusting. This is why peope rebelled against you in the first place. We tired of your lies, cheats, manipulation, and fraud. We will bring the system down on your heads.
Art Fire
Art Fire Jan 28, 2021 3:31PM ET
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TD admitted they stopped the trade because they wanted to protect the people on the other side... right when people were going to make money.
Lisa Johnson
Lisa Johnson Jan 28, 2021 3:18PM ET
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Not allowing a person to buy is not productive. It is stopping honest investors and hurting the stock. BB & NOK are really good buys. They just happened to be potential targets to squeeze.
Di Ni
Di Ni Jan 28, 2021 2:44PM ET
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this is going to get messy. main st vs wall st.  I am betting on main st.  clear market manipulation going on. vol+dislocation. crash on the way.
Permabull SandP
SnPermabull Jan 28, 2021 1:54PM ET
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"Worries ease" my ******** they are straight limiting market access and halting trading for retail investors and claiming that the short squeeze is done and traders are out. SEC please for this manipulation.
Casador Del Oso
Casador Del Oso Jan 28, 2021 1:47PM ET
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Sell side economics...you can only sell stocks not buy.
Fusairu Takumi
Fusairu Takumi Jan 28, 2021 1:45PM ET
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Can't invest if the game is rigged... look at what's going on in the stock market. Big players ***ed cause retail traders learned their game play, and played it against them. Haukt3s platforms, limited trading, etc... all to stop anyone from coming up, u less it's their cronies. Garbage industry Wallstreet
Mih Esh
Mih Esh Jan 28, 2021 1:30PM ET
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Enjoy the bull 🏃💨
Christos Rammos
Christos Rammos Jan 28, 2021 12:52PM ET
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Big drop coming
Bernard Tan
Bernard Tan Jan 28, 2021 12:35PM ET
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Since there’s already vaccine, why should tech stocks rise????
Casador Del Oso
Casador Del Oso Jan 28, 2021 12:12PM ET
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When the inevitable crash occurs it's going to hurt bad!
Elias Castillo
Elias Castillo Jan 28, 2021 12:12PM ET
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Elias Castillo
Elias Castillo Jan 28, 2021 12:12PM ET
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The crash ALREADY happened o March 2020. This year is a recovery year for the U.S thus making it a Bull year
Ron Humphrey
Ron Humphrey Jan 28, 2021 12:12PM ET
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When ?
Dario Ruff
Dario Ruff Jan 28, 2021 12:12PM ET
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Ron Humphrey tmmrw will be a big pullback plus friday usually has low volume so hust wait
Elias Castillo
Elias Castillo Jan 28, 2021 12:12PM ET
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The crash already happened in March 2020. 2021 will be a recovery year for U.S thus making the markets stabiize and go UP
Kaveh Sun
Kaveh Sun Jan 28, 2021 10:05AM ET
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Yesterday eas down,down,kept going down. Today is the bounce.
John Healy
John Healy Jan 28, 2021 9:46AM ET
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This is not free-market capitalism.
Nison Kay
Nison Kay Jan 28, 2021 9:46AM ET
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Its lies. I hope people wake up and see what is going on. And they say the election was not rigged. Hahahah
John Patrick
John Patrick Jan 28, 2021 9:44AM ET
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Shrug Off :)
 
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