Meme Stock GameStock and AMC Entertainment Rally Premarket
Stocks came under pressure this week after Federal Reserve minutes confirmed its intention to roll back the stimulus and suggested it could do so sooner and faster than previously planned due to high inflation. The S&P 500 is down 1.5% this week on track for its worst weekly performance since mid-December.
Government bonds have sold out in the prospect of an earlier interest rate hike as market prices and the Fed shrink its portfolio of bonds in the near future. The yield on the benchmark 10-year Treasury note eased to 1.727% on Friday from 1.733% on Thursday after four consecutive days of growth. Yields increase as bond prices fall.
“What was happening in the markets this week was expectations about how fast the Fed is going to tighten policy,” said Fahd Kamal, chief investment officer at Kleinwort Hambros. “This is a transition year where we move from record policy support to actual tightening. There will be enormous volatility as we figure out how to operate in this paradigm.”
Meme stock GameStop gained over 18% in premarket trading after the Wall Street Journal reported that the company was planning to enter the cryptocurrency and non-fungible token markets. AMC Entertainment,
Another firm popular among retail traders jumped 6.5%.
The jobs report for December, along with data on non-farm payrolls, the unemployment rate and average hourly earnings, is expected at 8:30 a.m. ET. Economists are predicting that US companies added jobs at a faster rate in December, although the surveys were conducted before the recent sharp rise in Covid-19 cases.
Fed officials have said the health of the labor market is an important factor in their monetary policy decisions. Investors will closely examine the report to see whether it is in line with the Fed’s plans outlined in the minutes and whether wages continue to rise, which could mean more sustained inflation.
“If the data shows the labor market is still going too hot, the Fed needs to strengthen the case and tighten policy,” said Sebastian Mackey, a multiset fund manager at Invesco.
Oil prices rose. Global benchmark Brent crude rose 1.2% to $82.94 a barrel, its highest level in eight weeks. According to analysts at ING, cold conditions in North Dakota and Alberta, Canada could potentially reduce oil supplies if protests in crude producer Kazakhstan affect production.
Natural gas prices in Europe rose in line with the gas benchmark and rose more than 35% this week, on track for the biggest weekly increase in 18 months.
Bitcoin extended its decline for a third day on Thursday, down 3.7% compared to its level at 5 p.m. ET. It traded around $41,500, the lowest level since September.
Lighting company Acuity Brands and transportation firm Greenbrier Companies are due to report earnings before the opening bell.
Overseas, the pan-continental stokes Europe 600 was down 0.1%. Shares of the bank rose, with UBS up 2.5% and Deutsche Bank up 1% as higher bond yields suggest lenders may charge higher interest on loans.
European government bond yields rose as the 10-year German bond yield climbed to minus 0.09%. If it crosses 0, it will be in positive territory for the first time since 2019.
Major stock benchmarks in Asia were mixed. The Shanghai Composite Index fell 0.2% on gains in technology stocks, while Hong Kong’s Hang Seng Index gained 1.8%. E-commerce giant Alibaba rose 6.5% and JD.com 4.8%. South Korea’s Kospi index rises 1.2%, fueled by Samsung Electronics,
Which climbed 1.8% after expectations of a jump in operating profit.
Write to Anna Hirtenstein at [email protected]