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Dow Futures Edge Higher, Market Volatility Spikes As Retail Grips Wall Street: Weekly Jobless Claims Fall to 847,000

Retail's recent grip on Wall Street has clouded better-than-expected earnings from Apple and Facebook and a dovish Fed, with futures pointing to a cautious start to the Thursday trading session.

The Thursday Market Minute

  • Global stocks follow Wall Street lower as market volatility spikes amid retail-powered attacks on short-sellers, mixed tech earnings.
  • Apple blasts Q1 forecasts with a record $111.4 billion in sales, but declines to provide detailed current-quarter guidance.
  • Tesla misses on earnings and provides and unclear 2021 delivery outlook, while Facebook cautions on advertising headwinds after a solid Q4.
  • Wall Street's 'fear gauge, the VIX, rises the most since last March amid the ripple effects from retail-driven surges for stocks such as GameStop, AMC and Bed, Bath & Beyond.
  • The U.S. dollar rises to a 10-day high on foreign exchange markets, while benchmark 10-year Treasury note yields hold at 1.01%
  • U.S. equity futures suggest a mixed open on Wall Street following quarterly earnings from McDonald's, Visa, Mastercard and Comcast as well as the first reading of Q4 GDP growth and a modest decline in weekly jobless claims.

U.S. equity futures suggest a mixed open Thursday, following on the from the biggest one-day decline on Wall Street in three months, as retail-driven stock gains trigger a spike in market volatility and could better-than-expected earnings from Apple  (AAPL) - Get Apple Inc. Report and Facebook  (FB) - Get Meta Platforms Inc. Report.

Stocks were little-changed from their prior levels after a modest decline of 67,000 in weekly jobless claims, which came in at 847,000 for the week ending January 23, and a largely in-line reading of fourth quarter GDP growth of 4%. 

A sober assessment of the U.S. economic outlook from Federal Reserve Chairman Jerome Powell on Wednesday underscored the challenges faced in vaccine distribution and job creation for the Biden Administration, but at least allowed for some comfort in the fact that the FOMC reiterated its commitment to near-zero rates and billions in monthly bond purchases.

Wall Street stumbled into its biggest decline since late October, however, amid a cocktail of high-profile surges for heretofore forgotten consumer-focused stocks such as GameStop  (GME) - Get GameStop Corporation Report, Bed, Bath & Beyond  (BBBY) - Get Bed Bath & Beyond Inc. Report and AMC Entertainment  (AMC) - Get AMC Entertainment Holdings Inc. Class A Report and the ongoing challenge to short-sellers from newly-motivated retail investors.

The subsequent pressures reported on several big-name hedge funds triggered the biggest jump in the CBOE's key volatility index, the VIX, since March of last year, and pushed the Dow more than 600 points lower by the end of the session.

Futures were able to find their feet in overnight trading, however, even as Apple posted a blowout first quarter profit report that included a record $111.4 billion in total revenues and record iPhones sales. Facebook, too, beat Street forecasts for its fourth quarter earnings, with revenues of $28 billion and a bottom line of $11.22 billion.

The VIX is holding its elevated levels in extended hours trading, rising 38.3% to 31.84 points,  while the U.S. dollar index is trading at the highest in more than two weeks as investors take a cautious stance heading into what is likely to be a volatile trading session.

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Futures tied to the Dow Jones Industrial Average suggest a 5 point opening bell gain, while those linked to the S&P 500 are priced for a 4 point pullback. Nasdaq Composite futures suggest a 100 point retreat for the tech-focused benchmark.

Tesla  (TSLA) - Get Tesla Inc. Report shares were marked 6.1% lower in pre-market trading after a mixed fourth quarter earnings report that included more than $400 million in carbon credit sales, $10.74 billion in total revenues and unclear guidance on deliveries for the 2021 year.

Apple was marked 2.4% lower at $138.36 after it declined to provide March quarter guidance on sales while Facebook fell 1.4% alongside the broader Nasdaq decline.

Many of the retail-driven stock surges of the past week look set to give back some of their gains, based on pre-market trading, following a brief outage for the Wallstreetbets forum on Reddit, with Bed Bath & Beyond marked 11.8% lower and AMC falling 7.7%. GameStop is up 38% at $480.20. 

European stocks fell to a one-month low in overnight trading, paced to the to downside by weaker tech stocks, as authorities around the region grapple with a slower-than-expected vaccine rollout and a dispute with AstraZeneca  (AZN) - Get AstraZeneca PLC Report over its earlier production commitments.

The Stoxx 600 was marked 0.56% lower in early trading, lead by a 0.4% decline for Germany's DAX performance index, while Britain's FTSE 100 fell 0.8% in the opening hours of trading in London.

Elsewhere, benchmark 10-year Treasury note yields, which briefly dipped below 1% in late afternoon trading on Wednesday, held at 1.008% ahead of the first estimate of fourth quarter GDP growth expected at 8:30 am Eastern time.

Global oil prices were largely flat, however, following yesterday's Energy Department report which showed domestic crude stocks falling nearly 10 million barrels last week to the lowest since March of 2020.

WTI crude futures for March deliver were marked 9 cents lower at $52.76, while Brent contracts for the same month were largely unchanged at $55.85 per barrel.