Stocks fall, looking to end the week lower

Stocks dipped Friday morning, reversing course after a recovery rally on Thursday.

The Dow fell more than 150 points, or about 0.6%, shortly after the opening bell. The index had closed higher by 1%, or 300 points, a day earlier. Still, each of the Dow, S&P 500 and Nasdaq were on track to post weekly losses after dipping earlier in the week.

Shares of some of the heavily shorted stocks that had become popular picks among members of Reddit’s r/wallstreetbets forum surged anew after sliding during the regular session and giving back steep gains from earlier this week. GameStop (GME) shares rocketed higher after nearly halving on Thursday. Shares of AMC (AMC) also soared Friday after sliding on Thursday, as did shares of BlackBerry (BB), Express (EXPR), Bed Bath & Beyond (BBBY) and Nokia (NOK).

Over the course of this week, trading in these and other heavily shorted names generated historic trading volumes in equity markets, surpassing even the volume of trades taking place at the most volatile points of the pandemic in 2020. More than 23.6 billion shares of U.S.-traded stocks were exchanged on Wednesday this week, according to Bloomberg data, marking the most ever in records spanning more than a decade.

The Securities and Exchange Commission (SEC) said Friday it was “closely monitoring and evaluating the extreme price volatility of certain stocks’ trading prices over the past several days,” according to a statement. A day earlier, online brokerages including Robinhood, Webull Financial and E-Trade Financial blocked buying of many of these volatile shares, drawing the ire of users, criticism from lawmakers and a class action lawsuit against Robinhood for the trading restrictions.

Elsewhere, recent reports on U.S. economic activity came in better than expected, pointing to a tentative improvement in the economic landscape as investors await widespread vaccinations and lasting business reopenings. Weekly unemployment claims dipped below 900,000 for the first time in three weeks, albeit while remaining at a historically elevated level. And on Friday, new data showed that personal income rose more than expected in December, while consumer spending ticked down less than feared.

Story continues

“I think what we’re looking at is, we’ve got pockets around the market that are decidedly showing signs of bubble-ness so to speak, whether that comes from what we saw [Wednesday], which was really a side-show of the markets, related to these shorted stocks that were driven up higher by individual investors,” John Stoltzfus, Oppenheimer chief markets strategist, told Yahoo Finance on Thursday. “The other side of it would be on a fundamental basis, what we are seeing is an economy that is positioning itself for a recovery process. And that means your core equities are likely to have an opportunity to move higher.”

“The valuation might be stretched in terms of a more conventional period, but right now with the Fed essentially magnanimously providing liquidity and fiscal policy coming to the rescue at least one more time to help small businesses and individuals, we would say that valuations are probably reflecting the current environment, and a need for investors who have intermediate to long term goals to invest in stories that are fundamentally sound,” Stoltzfus added.

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9:31 a.m. ET: Stocks open lower, GameStop more than doubles as volatile week continues

Here were the main moves in markets, as of 9:31 a.m. ET:

• S&P 500 (^GSPC): -27.04 points (-0.71%) to 3,760.34

• Dow (^DJI): -271.5 (+0.9%) to 30,331.86

• Nasdaq (^IXIC): -42.88 (-39.33%) to 13,297.82

• Crude (CL=F): +$0.71 (+1.36%) to $53.05 a barrel

• Gold (GC=F):+$37.70 (+2.05%) to $1,878.90 per ounce

• 10-year Treasury (^TNX): +3.9 bps to yield 1.094%

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8:30 a.m. ET: Personal income rises more than expected in December while spending declines less than expected

U.S. personal income increased by 0.6% in December after a downwardly revised drop of 1.3% in November, the Bureau of Economic Analysis said Friday. December’s increase was better than the 0.1% tick up consensus economists expected, according to Bloomberg data.

The increase to personal income mostly came as a result of increased government social benefits, compensation and personal dividend income, the BEA reported. This included benefits through the pandemic unemployment assistance programs, which were renewed until March.

Personal spending, the biggest component of U.S. economic activity, ticked down just 0.2% in December, or half the expected decline for the month. This followed a revised drop of 0.7% in November.

The personal saving rate, or savings as a percentage of disposable income, increased for the first time since April in December, ticking up to 13.7% from 12.9%. This remained well above the pre-pandemic average rate of below 7.5% throughout 2019.

Core personal consumption expenditures, the Federal Reserve’s core inflation gauge, increased by only 1.3% year-over-year in December, coming in well below the Fed’s 2% target yet again.

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8:04 a.m. ET: Johnson & Johnson’s single-dose COVID-19 vaccine found to be 66% effective in global trial

Johnson & Johnson (JNJ) reported Friday morning that its new single-shot COVID-19 vaccine was 66% effective in preventing moderate to severe cases of the virus 28 days after vaccination. The data was based on a global study including more than 44,000 participants. In the U.S. alone, the efficacy rate for the vaccine was 72%.

The vaccine also prevented 85% of severe infections and 100% of hospitalizations and deaths, the company added.

The efficacy data came in below that from Pfizer and Moderna, with these drugmakers’ shots each conferring well over 90% efficacy in preventing COVID-19. However, unlike Pfizer’s and Moderna’s vaccines, J&J’s is delivered in just a single dose, and can be stored for longer periods of times at less extreme temperatures.

J&J said it plans to file for emergency use authorization in the U.S. in February and expects to have product immediately available for shipment at that time.

Scott Gottlieb, former U.S. Food and Drug Administration Commissioner, said in a Twitter post Friday morning that J&J’s vaccine data was a “fantastic result.”

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7:23 a.m. ET Friday: Stock futures dip, pointing to a lower end to the week

Here’s where markets were trading on Friday ahead of the opening bell:

• S&P 500 futures (ES=F): 3,756.75, down 22.5 points or 0.6%

• Dow futures (YM=F): 30,358.00, down 149 points or 0.49%

• Nasdaq futures (NQ=F): 13,074.00, down 112 points or 0.85%

• Crude (CL=F): +$0.24 (+0.46%) to $52.58 a barrel

• Gold (GC=F): +$1,868.30 (+1.47%) to $1,868.30 per ounce

• 10-year Treasury (^TNX): +1.6 bps to yield 1.071%

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6:24 p.m. ET Thursday: Stock futures open lower

Here were the main moves in markets, as of 6:24 p.m. ET Wednesday

• S&P 500 futures (ES=F): 3,770.25, down 9 points or 0.24%

• Dow futures (YM=F): 30,474.00, down 33 points or 0.11%

• Nasdaq futures (NQ=F): 13,171.75, down 14.25 points or 0.11%

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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Originally published January 29, 2021, 3:33 PM