Stocks rose on Wednesday, with each of the three major indexes on track to recover some losses from Tuesday.
The Dow gained about 100 points, or 0.3%, as shares of component Intel (INTC) jumped after the company announced a $20 billion investment into building out its in-house chip manufacturing operations to catch up with competitors. The Nasdaq rose by more than 0.5%, and the S&P 500 gained 0.3%. Treasury yields steadied, and the benchmark 10-year yield hovered around 1.64% after hitting a 14-month high of more than 1.75% last week.
A day earlier, the Dow dropped by more than 300 points, or about 1%, for its worst session in nearly three weeks. The S&P 500 also dipped, and the Nasdaq shed more than 1% as technology stocks added to recent declines. Many of the cyclical stocks that had led markets higher for much of the last three months underperformed, and the industrials, energy and financials sectors lagged.
“I think what we’ve seen over the past couple days is some end-of-quarter positioning,” Tom Essaye, Sevens Report Research founder, told Yahoo Finance. “The best performers quarter-to-date are getting sold right now, some of the worst performers are rallying. That’s typical as we end a quarter.”
“But then also, the outlook on COVID has dimmed a bit – not so much here in the United States, but definitely in Europe, where they seem to be experiencing a third wave,” he added. Overseas, Germany extended its stringent lockdown measures for another month, and the European Union was reportedly contemplating imposing temporary export restrictions of its COVID-19 vaccines. “The vaccine rollout there is not going so well as we know, and now you’re seeing increased lockdowns.”
Investors have also been digesting remarks from a parade of Federal Reserve speakers this week. Much of the commentary has served to reinforce the central bank’s stance that any inflation appearing this year will be transitory, and not significant enough to warrant a shift in their monetary policy positioning. Last week, the Federal Reserve’s updated projection material showed the median forecast among Federal Open Market Committee participants was still to keep benchmark interest rates near zero through at least 2023.
Federal Reserve Chair Jerome Powell told the U.S. House Committee on Financial Services on Tuesday that he expects a temporary increase in inflation in the coming months compared to the same period last year, but that the forthcoming rises will be short-lived since so many Americans will still be out of work as the economy recovers from the pandemic.
Other members of the Federal Open Market Committee echoed similar sentiments. Federal Reserve Governor Lael Brainard said during a virtual event Tuesday that “it will take some time to achieve substantial further progress” on the Fed’s goals of achieving maximum employment and sustainable 2% inflation. She advocated “a patient approach based on outcomes rather than a preemptive approach based on the outlook” as a more efficient means of achieving the central bank’s goals, suggesting the Fed would stay the course even as prospects of spiking inflation spook some market participants.
9:45 a.m. ET: GameStop shares slump after earnings, company warns short squeezes may continue to fuel volatility
Shares of GameStop (GME) slid more than 18% Wednesday morning after the company reported disappointing fourth-quarter earnings results, in the retailer’s first quarterly report since its Reddit-fueled stock rally.
Fourth-quarter adjusted earnings of $1.34 per share missed estimates for $1.43. Closely watched comparable sane store sales rose just 6.5%, or slower than the 8.1% rise anticipated, according to Bloomberg consensus data. The company also continued to suspend its guidance amid pandemic-related uncertainty, and said it does not plan to report comparable sales in 2021.
Though the company did not address the social media-induced surge in its stock, GameStop did address the meteoric short squeeze in its annual SEC filing.
“A large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which may increase the likelihood that our Class A Common Stock will be the target of a short squeeze,” according to the filing.
“We have received, and may continue to receive, a high degree of media coverage that is published or otherwise disseminated by third parties, including blogs, articles, message boards and social and other media,” It added. “This includes coverage that is not attributable to statements made by our officers or associates. Information provided by third parties may not be reliable or accurate and could materially impact the trading price of our Class A Common Stock which could cause stockholders to lose their investments.”
9:30 a.m. ET: Stocks open higher
Here were the main moves in markets shortly after the opening bell:
S&P 500 (^GSPC): +14.09 points (+0.36%) to 3,924.61
Dow (^DJI): +90.06 points (+0.28%) to 32,513.21
Nasdaq (^IXIC): +50.71 points (+0.4%) to 13,280.02
Crude (CL=F): +$1.97 (+3.41%) to $59.73 a barrel
Gold (GC=F): +$6.40 (+0.37%) to $1,731.50 per ounce
10-year Treasury (^TNX): +0.6 bps to yield 1.644%
9:14 a.m. ET: Crude oil prices rise amid Suez Canal blockage
U.S. and Brent crude oil futures rose Wednesday morning as investors contemplated a blockage of the Suez Canal, a major artery for global shipping traffic and energy transportation.
U.S. West Texas intermediate crude oil prices (CL=F) rose more than 3% to as high as $59.74 per barrel, looking to recover losses after prices dropped by more than 6% on Tuesday. Brent crude (BZ=F) jumped to as high as $62.85. The moves higher came after a major container ship became stuck in the Suez Canal late Tuesday, causing more than 100 ships to become stuck on either end of the canal.
The Suez Canal Authority said that efforts continued this morning to float the trapped container.
8:30 a.m. ET: Durable goods orders unexpectedly fell in February
U.S. orders for manufactured goods intended to last at least three years dropped in February amid a bout of harsh winter weather, unwinding some recent progress in the manufacturing sector recovery.
Durable goods orders fell 1.1% in February over January, according to the Commerce Department’s preliminary monthly report. Consensus economists were looking for a 0.5% monthly increase, based on Bloomberg consensus data. During the prior month, durable goods orders were revised up to see a 3.5% increase, from the 3.4% rise previously reported.
Excluding transportation orders, durable goods orders were still down 0.9% in February following a 1.6% rise in January. Non-defense capital goods orders excluding aircraft, which serves as a proxy for businesses’ future spending plants, fell by 0.8%.
8:00 a.m. ET: Mortgage applications fell for a third straight week last week
Mortgage applications across the U.S. dipped for a third consecutive week, and for the sixth time in seven weeks, during the period ended March 19, according to the Mortgage Bankers Association’s (MBA) weekly survey. The drop coincided with another increase in mortgage rates and tightening inventory, curbing some of the hot housing market activity seen over the past year.
Total loan application volume fell 2.5% on a seasonally adjusted basis compared to the period one week earlier. This followed a drop of 2.2% during the prior week. Refinances fell 5% week-over-week, and were down 13% compared to the same week last year. Applications for purchases increased 3% week-over-week, and was 26% higher than the same period a week ago, however.
“The 30-year fixed mortgage rate increased to 3.36% last week and has now risen 50 basis points since the beginning of the year, in turn shutting off refinance incentives for many borrowers. Refinance activity dropped to its slowest pace since September 2020, with declines in both conventional and government applications,” Joel Kan, associate vice president of economic and industry forecasting at MBA, said in a statement.
“Inadequate housing inventory continues to put upward pressure on home prices,” Kan added. “As both home-price growth and mortgage rates continue this upward trend, we may see affordability challenges become more severe if new and existing supply does not significantly pick up.”
7:20 a.m. ET Wednesday: Stock futures hold onto overnight gains
Here’s where markets were trading as of 7:20 a.m. ET Wednesday morning:
S&P 500 futures (ES=F): 3,914.00, up 14.25 points or 0.37%
Dow futures (YM=F): 32,406.00, up 100 points or 0.3%
Nasdaq futures (NQ=F): 13,104.25, up 98 points or 0.75%
Crude (CL=F): +$1.36 (+2.35%) to $59.12 a barrel
Gold (GC=F): +$5.60 (+0.32%) to $1,730.70 per ounce
10-year Treasury (^TNX): -0.8 bps to yield 1.63%
6:06 p.m. ET Tuesday: Stock futures open higher
Here’s where markets were trading as the overnight session kicked off on Tuesday:
S&P 500 futures (ES=F): 3,902.25, up 2.5 points or 0.06%
Dow futures (YM=F): 32,327.00, up 21 points or 0.07%
Nasdaq futures (NQ=F): 13,038.25, up 32 points or 0.25%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: