The Wednesday Market Minute
- Global stocks extend gains, edging back towards all-time highs, as big tech earnings blowouts and stimulus bets power markets around the world.
- Amazon reports record sales of $125 billion, but news of Jeff Bezos' "transition" holds back early gains: Google parent Alphabet soars as cloud, ad revenues impress.
- Democratic lawmakers in the Senate look set to pass President Joe Biden's $1.9 trillion stimuli over Republican objections in the administration's first major policy effort.
- Treasury Secretary Janet Yellen is reportedly to meet heads of the SEC, Federal Reserve and CFTC to discuss last week's 'Meme Stock' surge on Wall Street.
- GameStop and AMC Entertainment shares extend slide as Reddit Army retreats, loping more than $160 billion in value from the Meme Stocks.
- U.S. crude hits a one-year high after a bigger-than-expected API drawdown, bets on the energy market rebound in 2021.
- U.S. equity futures suggest a firmer open on Wall Street ahead of earnings from Humana and AbbVie.
U.S. equity futures extended gains for a third consecutive session Wednesday, while a key gauge of market volatility tumbled, as the Reddit-fueled retail trading frenzy continues to fade while stimulus prospects and corporate earnings underpin a bullish outlook for stocks.
Oil prices also reached new 52-week highs in overnight trading, even as the dollar rose to its highest levels since early December, as investors bet that Democratic lawmakers in the Senate will collectively pass President Joe Biden's $1.9 trillion stimulus package over Republican objections.
The injection would buttress what has been an undoubtedly solid earnings season, with more than 80% of reporting S&P 500 companies topping Street earnings estimates, highlighted by blockbuster profits from big tech groups such as Amazon (AMZN) - Get Report and Alphabet (GOOGL) - Get Report last night and Apple (AAPL) - Get Report and Facebook (FB) - Get Report last week.
Reports of a crackdown on speculative trading in the retail market, which captured attention on Wall Street last week as stocks like GameStop (GME) - Get Report and AMC Entertainment (AMC) - Get Report added billions to their market value amid a wave of Reddit-fueled interest, also boosted sentiment.
Treasury Secretary Janet Yellen could meet with the heads of the U.S. Securities and Exchange Commission, the Federal Reserve and the Commodity Futures Trading Commission as early as this week, in fact, with many expecting some form of change to prevent a recurrence of last week's market-unsettling rally.
GameStop shares, which have lost $27 billion in value since their market peak last Thursday, were marked lower again in extended-hours trading, while losses for the so-called 'meme stocks', including AMC Entertainment, Blackberry (BB) - Get Report, Koss Corp (KOSS) - Get Report and others were tabbed at $167 billion.
U.S. stocks, however, look set to post modest opening bell moves Wednesday, with contracts tied to the Dow Jones Industrial Average indicating an 11 point dip and those linked to the S&P 500 priced for a 12 point advance.
The CBOE's benchmark volatility gauge, the VIX, which spiked the most in nearly a year last week amid the Reddit-powered short squeeze, was marked 19% lower on the session at 24.6 points.
Nasdaq Composite futures, meanwhile, suggest an 80 point opening bell gain thanks in part to a 7% pre-market surge for Google parent Alphabet, which posted fourth-quarter earnings of $22.30 per share last night on revenues of $59.9 billion.
Amazon shares, however, were marked 0.36% lower at $3,367.73 each after the surprise announcement that founder and CEO Jeff Bezos will step down later this year as he transitions to the role of executive chairman in favor of Amazon Web Services boss Andy Jassy.
That news took some of the gloss from a record fourth quarter, which saw revenues rise to $125.6 billion and earnings come in at a Street-blasting $14.09 per share.
In European markets, stronger-than-expected fourth quarter earnings and reports that former European Central Bank President Mario Draghi could be tapped to become Italy's next Prime Minster gave shares an early boost, offsetting a weak reading for January economic activity and the slow rollout of coronavirus vaccines around the region.
The Stoxx 600 was marked 0.6% higher in early trading, paced by a 2.25% gain for Italy's FTSE-MIB index, while Britain's FTSE 100 added 0.4% in early London trading.
Overnight in Asia, Japan's Nikkei 225 closed 1% higher at 28,646.50 points while the region-wide MSCI ex-Japan benchmark added 0.6% heading into the close of trading.
Oil prices were also on the rise, testing the highest levels in 11 months, after the American Petroleum Institute reported a bigger-than-expected decline in domestic crude stocks of 4.3 million barrels over the week ending January 29.
WTI crude futures for March delivery were seen 52 cents higher at $55.28 per barrel, the highest in a year, while Brent contacts for April delivery, the global benchmark, were marked 64 cents higher at $58.10 per barrel.