Here are the most important news, trends and analysis that investors need to start their trading day:
1. U.S. stocks set to open higher after a rough Wednesday
U.S. stock futures were higher Thursday, one day after the Dow, S&P 500 and Nasdaq saw steep declines of more than 2% as concern deepened about heightened speculative trading activity around soaring short-squeezed GameStop. Nasdaq futures had been lower earlier Thursday on weakness in Apple and Tesla after earnings. On Wednesday, the Dow, S&P 500 and Nasdaq moved further away from their record highs earlier this month. The Dow and S&P 500 turned negative for 2021, but the Nasdaq remained nearly 3% higher year to date.
The government just released two key economic reports: Gross domestic product and weekly jobless claims. Fourth-quarter GDP advanced 4%, a bit below estimates. Initial jobless claims for the week ending Jan. 23 totaled a still-elevated Covid level of 847,000 but fewer than expected.
2. GameStop swings wildly, positive and negative
GameStop shares soared yet again to as high as around $500 in Thursday's premarket, before going negative like they did overnight. As the Reddit-driven retail momentum continued to heat up, the brick-and-mortar video game retailer's stock reversed losses in overnight trading early Thursday, surging over 45% at one stage and then rapidly giving up those gains. The moves followed a more than 130% rally on Wednesday in heavy volume, pushing its week-to-date gains to 466%. The stock was worth about $40 just a week ago. It was worth around $6 a few months ago.
3. American Airlines stock soars as much as 50%
Major airlines reported quarterly results before the opening bell, with shares of heavily shorted American soaring about 50% at one stage, before cutting those gains in half. That action came despite the carrier posting a record fourth-quarter loss and facing difficult months ahead as new travel restrictions and a slow rollout of vaccines cloud hopes for a near-term recovery.
Dow stock McDonald's fourth-quarter earnings and revenue fell short of estimates. But the fast-food chain said U.S. same-store sales jumped to 5.5%, crediting marketing investments and promotional activity during the pandemic. Shares were modestly lower in premarket trading.
4. Tech stocks under pressure after earnings
Shares of Apple, Tesla and Facebook were mixed in the premarket, the morning after the tech giants reported quarterly results. In the case of Apple, whose stock soared more than 80% in the past 12 month, shares moving lower might be taking a breather despite the company's most profitable quarter ever.
Facebook beat estimates with quarterly earnings and revenue. The stock turned higher in the premarket. The company also said Apple's planned privacy changes may make it more difficult for Facebook to target users with ads. Facebook shares were up 26% in the past year as of Wednesday's close.
Tesla's quarterly earnings missed estimates, though revenue exceeded expectations. The high-flying stock, up over 670% in the past 12 months, was under some pressure after the company did not provide a clear vehicle delivery target for 2021.
5. Fed doesn't seem worried about manic trading
Some market pros see the frenzied short squeezes in GameStop and other shorted stocks as signs of a bubble brewing, but the Federal Reserve doesn't seem to. For that reason, investors expect asset prices could continue to rise. At his post meeting briefing Wednesday, Fed Chairman Jerome Powell was asked about the potential of Fed policy to fuel bubbles in markets and housing. Powell explained that the Fed has had to use its extraordinary policy to help the economy with still more than 9 million people out of work.
— Follow all the developments on Wall Street in real time with CNBC Pro's live markets blog. Get the latest on the pandemic with our coronavirus blog.
