Here are five things you must know for Friday, Jan. 29:
1. — Stock Futures Fall Amid Retail-Trading Frenzy
Stock futures were tumbling Friday amid the continued retail-trading frenzy on Wall Street.
Contracts linked to the Dow Jones Industrial Average fell 152 points, S&P 500 futures dropped 23 points and Nasdaq futures were slumping 117 points.
Investors have been roiled by the assault on hedge funds by small traders over online forums, like Reddit, that have forced the funds to reverse short positions on stocks such as GameStop (GME) – Get Report and AMC Entertainment (AMC) – Get Report.
GameStop, AMC and other heavily shorted names were soaring in premarket trading after the CEO of online brokerage Robinhood said restrictions on buying the stocks could be lifted Friday.
Robinhood Co-Founder and CEO Vlad Tenev told Bloomberg TV the platform halted purchases of 13 stocks on Thursday “to protect the firm and our customers.” Tenev said the company faced enormous requirements to deposit cash with clearinghouses to cover the settlements “around stocks that are very popular on social media.”
He added that Robinhood hopes “to re-enable buying as soon as (Friday) morning.”
Bloomberg, citing people with knowledge of the matter, reported that Robinhood had raised more than $1 billion from existing investors and has drawn down some of its credit lines with banks amid the market havoc.
Investors in Europe and Asia also were unnerved by the wild swings in these hot stocks.
“I’m definitely seeing the nerves,” Chris Weston, head of research at Melbourne broker Pepperstone, told Reuters.
“There’s a knock-on effect that happens from targeting hedge funds, and this could have legs … people are unsure how this social media movement plays into greater financial markets,” he added.
Stocks finished higher Thursday, clawing back some losses from the market’s worst session since October, as weekly jobless claims dipped and investors looked past disappointing tech earnings.
2. — Cryptocurrency Dogecoin Soars as Much as 800%
Dogecoin, which started as a “joke” cryptocurrency based on a popular internet meme, was soaring more than 200% Friday as retail investors expand their buying frenzy to digital currency.
According to Coingecko, Dogecoin was trading at $0.054 per coin. At one point over the last 24 hours Dogecoin had risen as much as 800%.
Dogecoin’s market value was at $6.83 billion, ranking it 11th among cryptocurrencies, according to data from Coingecko.
A Reddit group called SatoshiStreetBets has touted the the gains in Dogecoin, with one user saying “Doge = the crypto GME,” with “GME” referring to video game retailer GameStop.
3. — Novavax Says Covid-19 Vaccine Is 89% Effective
Novavax (NVAX) – Get Report said a Phase 3 trial of its Covid-19 vaccine candidate showed 89.3% efficacy against the disease, including against the fast-spreading U.K. variant, but was found to be less effective against an emerging South African variant.
The study “assessed efficacy during a period with high transmission and with a new U.K. variant strain of the virus emerging and circulating widely,” the company said in a statement.
A second more preliminary Phase 2b trial in South Africa showed promise against the South African variant of Covid-19, the disease caused by the coronavirus, but the efficacy rate dropped to under 50%.
The vaccine candidate, known as NVX-CoV2373, is the first “to demonstrate not only high clinical efficacy against Covid-19 but also significant clinical efficacy against both the rapidly emerging U.K. and South Africa variants,” said Stanley C. Erck, president and CEO of Novavax.
If approved, the Novavax vaccine would join existing vaccines from Pfizer (PFE) – Get Report, Moderna (MRNA) – Get Report and AstraZeneca (AZN) – Get Report that have been authorized in various countries.
Shares of Novavax were jumping in premarket trading Friday, up 31.71% to $176.50.
4. — Friday’s Calendar: Chevron and Caterpillar Earnings, Consumer Sentiment
Eli Lilly (LLY) – Get Report reported fourth-quarter adjusted earnings of $2.75 a share vs. analysts’ expectations of $2.37.
Caterpillar (CAT) – Get Report reported adjusted profit of $2.12 a share in the fourth quarter, beating estimates of $1.49.
Honeywell International’s (HON) – Get Report fourth-quarter profit and sales topped Wall Street forecasts.
Chevron (CVX) – Get Report posted a fourth-quarter adjusted loss of 1 cent a share, below analysts’ estimates that called for earnings of 8 cents.
Honeywell is a holding in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stock? Learn more now.
The U.S. economic calendar on Friday includes Personal Income and Outlays for December at 8:30 a.m. ET, Chicago PMI for January at 9:45 a.m., Consumer Sentiment for January at 10 a.m. and the Employment Cost Index for the fourth quarter at 8:30 a.m. and the Pending Home Sales Index for December at 10 a.m.
5. — General Motors Going All-Electric by 2035
General Motors (GM) – Get Report plans to be “carbon neutral” by 2040 and phase out gasoline and diesel cars by 2035, a move one analyst said was “a very bullish signal” to the electric-vehicle sector.
Shares of GM were lower in premarket trading Friday after rising almost 3.5% following the announcement.
“General Motors is joining governments and companies around the globe working to establish a safer, greener and better world,” Chairman and CEO Mary Barra said in a statement.
GM said that globally by mid-decade it would offer 30 all-electric models, and by the end of 2025 the automaker said 40% of its models offered will be battery electric vehicles.
The company said it was investing $27 billion in electric and autonomous vehicles in the next five years – up from the planned $20 billion before the onset of the Covid-19 pandemic.
[“This] is a very bullish signal for the EV sector domestically,” Wedbush analyst Dan Ives said in a note.
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