Dow drops more than 600 points for its worst day since October, S&P 500 goes red for the year
U.S. stocks fell sharply on Wednesday amid disappointing earnings, while concern about heightened speculative trading activity deepened.
The Dow Jones Industrial Average lost 633.87 points, or 2.1%, to 30,303.17 for its worst day since Oct. 28. The S&P 500 dropped 2.6% to 3,750.77, slipping from a record high and suffering its biggest drop in three months. Wednesday’s steep losses wiped out the 2021 gains for the S&P 500 and it’s now down 0.1% on the year. The tech-heavy Nasdaq Composite slid 2.6% to 13,270.60.
Boeing fell nearly 4% after its earnings report showed its 2020 net loss hit a record of $11.9 billion amid the 737 Max grounding and the coronavirus pandemic. Shares of AMD tumbled more than 6% even after the chipmaker posted revenue and earnings that beat Wall Street’s already high expectations.
But it was intensifying speculative behavior among retail investors that was causing the most concern. Heavily shorted names, including GameStop and AMC Entertainment, continued to be pushed higher by amateur day traders in online chat rooms. Some investors are worried about mounting losses by hedge funds spilling over to other areas of the market as those funds sell other securities to raise cash. Investors are also concerned the speculative behavior is a sign the market is overvalued and a pullback is near.
GameStop shares exploded again, more than doubling on Wednesday. CNBC learned Melvin Capital, the hedge fund targeted by the retail investing crowd on Reddit had sold out of its short position. More hedge funds were facing big losses because of their losing short positions, CNBC’s David Faber reported on Wednesday.
Stock futures dip after a steep sell-off on Wall Street, Apple and Tesla fall after earnings
Stock futures fell in overnight trading on Wednesday as the market is poised to extend a sharp sell-off amid concerns about heightened speculative trading.
Futures on the Dow Jones Industrial Average traded 120 points lower. S&P 500 futures dipped 0.7% and Nasdaq 100 futures fell 0.8%.
Apple turned in its largest revenue on record at $111.4 billion in its fiscal first-quarter earnings report for fiscal 2021. Sales for every product category rose by double-digit percentage points. Shares of the tech giant dipped 3%, however.
Tesla dropped more than 3% in extended trading after the electric car maker posted worse-than-expected earnings for the latest quarter. The company also said it expects annual average delivery growth of 50% going forward.
Reference: CNBC
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