Stocks End Lower; Tech Earnings Boost Afterhours: Markets Wrap

(Bloomberg) -- U.S. stocks ended an up-and-down session slightly lower, weighed down by worries over virus variants and hurdles to a fresh aid package. Futures on the Nasdaq 100 Index jumped afterhours following a strong earnings report from Microsoft Corp.

The S&P 500 dropped just over 0.1% on an uneventful day at the index level. Below the surface, sentiment continued to be driven in large part by the retail trading set. GameStop Corp. rallied another 92%, while Pitney Bowes Inc. jumped more than 80% after a comparison to the video-game retailer. Small-caps were among the worst performers as traders turned away from bets on an end to Covid lockdowns.

While retail traders continued to pile into stocks with heavy short interest among hedge funds, a host of momentum stocks and fund darlings turned lower. Peloton Inc. lost 6%, Square Inc. fell 3.5% and Roku Inc. slid more than 5%.

Big tech stabilized in the aftermarket hours, with Microsoft Corp. surging 6% after sales topped projections. Amazon.com Inc., Apple Inc. and Facebook Inc. all advanced at least 0.5%.

Global stocks are mostly treading water near record highs as U.S. corporate earnings season gears up this week, with traders also keeping a eye on developments related to the pandemic and its spread. Vaccine coverage won’t reach a point that would stop transmission of the virus in the foreseeable future, the World Health Organization said.

“There’s little bit of bumpiness to start the week,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “Part of the cross current we’re seeing is concern about the new variants of the virus that seem to be spreading quite a bit. It just raises a question of uncertainty and when we’re going to get out from under the cloud of Covid.”

European stock markets closed in the green. Naturgy Energy Group SA soared 15% as asset manager IFM Global Infrastructure offered to buy a stake in the Spanish utility. Sweden’s EQT AB, one of Europe’s biggest private equity firms, jumped 15% after agreeing to take over Exeter Property Group in a $1.9 billion deal.

Elsewhere, Treasury yields held steady. Bitcoin retreated to trade near $32,000. In Asia, stock markets took a dive after China’s central bank withdrew cash from the banking system and an official cautioned about asset bubbles. The MSCI Asia Pacific Index sank the most in two months and internet giant Tencent Holdings Ltd. lost 6.3%.

These are some key events coming up in the week ahead:

• Microsoft Corp., Apple Inc., Tesla Inc., Facebook Inc. and Samsung Electronics Co. are among companies reporting results.
• The Federal Open Market Committee monetary policy decision and briefing by Chair Jerome Powell are scheduled for Wednesday.
• Fourth-quarter GDP, initial jobless claims and new home sales are among U.S. data releases Thursday.
• U.S. personal income, spending and pending home sales come Friday.

These are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.2% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index gained 0.6%.
• The MSCI Asia Pacific Index fell 1.2%.
• The MSCI Emerging Market Index dipped 1.5%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%.
• The euro rose 0.2% to $1.2166.
• The British pound climbed 0.4% to $1.3737.
• The Japanese yen rose 0.1% to 103.62 per dollar.

Bonds

• The yield on 10-year Treasuries rose one basis point to 1.04%.
• Germany’s 10-year yield added two basis points to -0.54%.
• Britain’s 10-year yield was little changed at 0.26%.

Commodities

• West Texas Intermediate crude fell 0.5% to $52.55 per barrel.
• Gold fell 0.2% to $1,852.18 an ounce.

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