U.S. stock futures drop with GameStop Frenzy Builds

GameStop’s shares rose more than 100% in the pre-market after closing 44% on Thursday. AMC Entertainment was up almost 60% before the opening bell.

Robinhood Markets, a popular place for online traders, said on Thursday that it would reinstate some stock trades it had previously restricted. American Airlines rose almost 10% in the premarket.

“The GameStop story, where you have retail investors who are a new player in the market, [is] one that people can’t ignore, ”said Luc Filip, head of private banking investments at SYZ Private Banking. “There are some critical links for hedge funds that don’t have these shares.” These investors are selling other long positions to close short positions at a loss, damaging markets in general.

The stock markets shook in January, shaken by headlines about the supply of vaccines against coronavirus and restrictive blocking measures around the world. The Cboe Volatility Index, an indicator of stress in the markets, rose 14% on Friday and is above 50% in January.

The earnings season continued, with oil company Chevron and construction equipment giant Caterpillar scheduled to report ahead of the opening bell. Pharmaceutical company Eli Lilly and aerospace company Honeywell are also expected to announce profits early in the morning.

Skyworks Solutions,

a chip maker that supplies Apple,

rose almost 13% in pre-market trading after reporting profits after Thursday’s business hours that exceeded analysts’ estimates. His board also approved a $ 2 billion share buyback.

Megacap technology companies slipped before the opening bell. Apple fell 1.2%, Microsoft fell 2.1% and Google’s parent company Alphabet 1.8%.

“These hedge funds that have been hit, they will have no choice but to get rid of some favorite holdings in order to raise that money,” to cover their short positions, said Seema Shah, chief strategist at Principal Global Investors, adding that it would see any further decline as a buying opportunity for technology stocks.

Abroad, the pan-continental Stoxx Europe 600 fell 1.2%. The relatively slow distribution of vaccines across the European Union and recent delays in supply are creating concerns about prolonged blockages and weighing on markets, investors said.

Swedish telecommunications company Ericsson made a 7.7% jump after reporting earnings that exceeded estimates and said it had gained market share. Meanwhile, Nokiain

Finland listed stocks rose nearly 5%. The shares of the mobile phone company listed in the United States are among those that have been shaken by retail investors in recent days.

In Asia, most of the main benchmarks have declined. The Shanghai Composite Index fell 0.6% and Japan’s Nikkei 225 fell 1.9%. South Korea’s Kospi index fell 3%, the biggest daily drop in five months.

In bond markets, the yield on 10-year US Treasury bonds rose to 1.071%, from 1.055% on Thursday. The dollar strengthened, with the WSJ Dollar Index rising 0.1% to its highest level in more than five weeks.

The US Bureau of Economic Analysis will release the latest consumer spending data at 8:30 am ET. Economists expect it to decline in December for the second consecutive month due to an increase in virus cases, signaling a loss of momentum for the economy at the end of the year.

“We expect more prudence from the US consumer in the short term,” said Gero Jung, chief economist at Mirabaud Asset Management, saying this would affect the economic recovery, as consumer spending represents two-thirds of the US gross domestic product.

Write to Anna Hirtenstein at [email protected]