Here are five things you must know for Monday, Feb. 1:
1. -- Stock Futures Rise as Reddit Crowd Turns to Precious Metals
Stock futures were higher Monday as the anxiety over volatile retail trading, particularly in shares of GameStop (GME) - Get Report and AMC Entertainment (AMC) - Get Report, ebbed as day traders turned their attention to precious metals.
Contracts linked to the Dow Jones Industrial Average gained 246 points, S&P 500 futures were up 39 points and Nasdaq futures rose 148 points.
Silver became the new target of retail investors over the weekend, with futures surging as much as 13%.
Stocks finished sharply lower Friday amid the continued retail-trading frenzy on Wall Street and concerns over distribution of coronavirus vaccines. The S&P 500 posted its biggest weekly decline since October.
The Dow and the S&P 500 each lost 3.3% last week, and the Nasdaq declined 3.5%.
On the stimulus front, 10 Republican senators proposed a coronavirus relief plan of about $600 billion an an alternative to the Biden administration's $1.9 trillion package.
2. -- Silver Is New Target for Retail Investors
Silver prices surged Monday as the Reddit mania surrounding heavily shorted stocks spread to the metals market.
Spot silver traded up 8.88% early Monday to $29.39 an ounce. Futures had surged as much as 13% over the weekend, with silver crossing $30 an ounce for the first time since 2013.
Trending on Twitter: "#silversqueeze."
People on the WallStreetBets Reddit forum have pounced on silver and the iShares Silver Trust ETF (SLV) - Get Report, with traders seeing it as a way to hurt big banks which they believe have been artificially suppressing prices.
BlackRock's (BLK) - Get Report iShares Silver Trust, the largest exchange-traded product tracking the metal, recorded net inflows of $944 million on Friday, according to Bloomberg.
The scope for a short squeeze in silver is less obvious, with money managers having had a net-long position on silver since mid-2019, Bloomberg reported, citing futures and options data from the Commodity Futures Trading Commission.
“Last week’s events have shown it to be unwise to doubt the purchasing power of retail investors, and this has been sufficiently demonstrated again on the silver market,” said Howie Lee, an economist at OCBC Bank. “They may find it a bit harder to squeeze the silver market than they did with GameStop - the former is much bigger and more liquid - but the momentum looks like it rests with them at the moment.”
3. -- Robinhood Reduces Restricted Trading List to Eight Stocks
Robinhood, the online trading app, has reduced the number of companies on which it had imposed trading limits to eight from 50.
Opening new positions in GameStop, AMC Entertainment, BlackBerry (BB) - Get Report, Express (EXPR) - Get Report, Genius Brands (GNUS) - Get Report, Koss Corp. (KOSS) - Get Report, Naked Brand (NAKD) - Get Report and Nokia (NOK) - Get Report on Monday will be limited, Robinhood said on its website.
GameStop was falling 7.96% in premarket trading Monday to $299.13. The stock has gained 1,643% so far in 2021.
Robinhood last week said it had to limit trading in 50 stocks because of huge costs associated with settling the massive number of trades.
“It was not because we wanted to stop people from buying these stocks,” Robinhood said.
The trading app came under fire last week after its move to impose trading restrictions, along with limits imposed by online brokerages, sparked an outcry among social media groups and elected officials alleging a Wall Street effort to protect itself against newly empowered populist investors.
4. -- This Week's Calendar: Amazon and Alphabet Earnings, U.S. Jobs Report
Earnings reports are expected Monday from Warner Music Group (WMG) - Get Report, Cirrus Logic (CRUS) - Get Report, ON Semiconductor (ON) - Get Report, Thermo Fisher Scientific (TMO) - Get Report and NXP Semiconductors (NXPI) - Get Report.
Reports are expected later in the week from Amazon (AMZN) - Get Report, Alphabet (GOOGL) - Get Report, Alibaba (BABA) - Get Report, United Parcel Service (UPS) - Get Report, Pfizer (PFE) - Get Report, Chipotle (CMG) - Get Report, Amgen (AMGN) - Get Report, Exxon Mobil (XOM) - Get Report, AbbVie (ABBV) - Get Report, PayPal (PYPL) - Get Report, Electronic Arts (EA) - Get Report, Spotify (SPOT) - Get Report, Merck (MRK) - Get Report, Penn National Gaming (PENN) - Get Report, Snap (SNAP) - Get Report, Ford (F) - Get Report, Pinterest (PINS) - Get Report and Activision Blizzard (ATVI) - Get Report.
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The U.S. economic calendar on Monday includes the Markit Manufacturing PMI (final) for January at 9:45 a.m. ET and the ISM Manufacturing Index for January at 10 a.m., and Construction Spending for December at 10 a.m.
Economic reports expected later this week include the official U.S. Nonfarm Payrolls Report for January, Durable Goods Orders and Factory Orders.
5. -- Exxon and Chevron Reportedly Discussed a Merger Last Year
The top executives at Exxon Mobil and Chevron (CVX) - Get Report discussed a merger of the two oil companies last year after the coronavirus pandemic pummeled oil and gas demand, The Wall Street Journal reported.
The discussions were described as preliminary and aren’t ongoing but could come back in the future, people familiar with the talks told the Journal.
A merger of the energy giants would create a company with a market value of more than $350 billion. Together, they would form the world’s second largest oil company by market capitalization and production, producing about 7 million barrels of oil and gas a day based on pre-pandemic levels, the Journal noted.
Saudi Aramco is No. 1 in both measures.
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