Friday, January 29, 2021
Top Story
What About GameStop?
The surge in GameStop and other highly shorted stocks has taken the country’s imagination by storm. These parabolic moves probably don’t reflect an overall unhealthy market, but institutions covering shorts at sizable losses may be removing capital from some big-cap names. Is this a sign of a broader market bubble? Find out more in yesterday’s blog post, Will GameStop Stop the Bull Market?.
Daily Insights
Up and down week for stocks with retail trades in focus
- US stocks opened lower today after Thursday’s strong rebound.
- European markets are firmly lower in midday trading.
- Asian stocks sold off overnight with Korea underperforming.
US economic growth moderated in Q4 2020
The high-water mark and holiday surge in COVID-19 cases weighed on US gross domestic product (GDP) growth in the fourth quarter, but the US economy was able to avoid a double-dip like Europe. We look at what’s in store for the economy in the first quarter of 2021 in today’s LPL Research blog.
Technical update
Stocks attempted to bounce back on Thursday but closed well off session highs. The S&P 500 Index gained 1%, holding above support from the January 15 lows at 3749. However, the Russell 2000 Index lost ground, and breadth was poor for such a strong headline gain, as advancers outnumbered decliners by less than 2:1 on the NYSE.
COVID-19 news
The United States reported 165,000 new COVID-19 cases Thursday as the rate of decline is now leveling off (source: Johns Hopkins).
- New case growth in Western Europe remains bifurcated, with growth declining in the United Kingdom but trending upward in Spain and France.
- Johnson and Johnson’s vaccine candidate produced strong protection against COVID-19 in a late-stage trial; the company will apply for emergency use authorization.
Positive Trends Send Strong Signals
This week’s Market Signals podcast discusses why positive COVID-19 news, solid small caps performance, high stock valuations, and more positive data trends are sending strong signals for 2021. Watch Market Signals: Positive Trends Send Strong Signals for 2021.
IMPORTANT DISCLOSURES
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
All index and market data are from FactSet and MarketWatch.
This Research material was prepared by LPL Financial, LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking # 1-05105382