Friday, January 29, 2021

Stocks End January With a Slide. Stocks fell sharply Friday as the speculative frenzy around GameStop continued, raising concerns about financial stability and offering another potential sign of market froth. The Dow Jones Industrial Average dropped around 621 points, or 2%, to end near 29,983, while the S&P 500 declined around 73 points, or 1.9%, to finish near 3714. The Dow and S&P 500 each lost 3.3% for the week. Friday’s losses also put both gauges in the red for January, with the Dow off 2% and the S&P 500 losing 1.1% for the month. The Nasdaq Composite dropped around 266 points Friday, or 2%, to close near 13,071. The tech-heavy index saw a 3.5% weekly fall, leaving it up 1.4% for the month.

J&J Vaccine Prevents Serious Illness, but Falls Short of Competitors

Johnson & Johnson’s single-dose vaccine is 66% effective in preventing moderate to severe Covid-19, the company announced Friday morning, lower than analysts and experts had expected.

Still, the company said that the Phase 3 trial, involving more than 43,000 participants, had shown that the vaccine is 85% effective at preventing severe disease, and completely prevented hospitalization and death from Covid-19 at 28 days after vaccination.

“Eighty-five percent efficacy in preventing severe COVID-19 disease and prevention of COVID-19-related medical interventions will potentially protect hundreds of millions of people from serious and fatal outcomes of COVID-19,” said Dr. Paul Stoffels, Johnson & Johnson’s chief scientific officer, in a statement.

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Novavax Covid-19 Vaccine Outperforms J&J’s

Widely anticipated data on Johnson & Johnson’s single-dose vaccine candidate fell short of expectations on Friday morning, while biotech upstart Novavax seemed to outperform the large drug company.

Novavax said Thursday that its vaccine was 89.3% effective in a Phase 3 study in the U.K., and 95.6% effective against the original Covid-19 strain. Those results seem to put Novavax in the same league as the Moderna and Pfizer vaccines in terms of effectiveness. In trials run earlier in the year, those vaccines demonstrated 95% protection from symptomatic disease.

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Robinhood Blocks Buying in GameStop, AMC, and Other Stocks

Investing app Robinhood blocked access to GameStop and other highflying names on Thursday as trading surged among retail users.

The move comes after GameStop stock has shot higher over the past week, inspiring a short squeeze. The action—driven by retail traders often using options—has spread to other names like BlackBerry, AMC Entertainment, and Bed Bath & Beyond. Several of those stocks were falling in premarket trading after enormous run-ups in the past few days. Other brokers have instituted similar restrictions.

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SEC Says It’s Monitoring for Abusive Trading Activity in Stocks Like GameStop

The Securities and Exchange Commission said Friday it’s reviewing actions taken by regulated entities after some major brokers limited the buying of stocks like GameStop following a surge in interest.

In a joint statement, Acting Chair Allison Herren Lee and commissioners Hester M. Peirce, Elad L. Roisman, and Caroline A. Crenshaw said the SEC has been monitoring the “extreme price volatility of certain stocks’ trading prices over the past several days.”

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Fed Reiterates Pledges on Near-Zero Rates and $120 Billion in Monthly Bond Buys

The Federal Reserve is keeping interest rates unchanged near zero and will continue to purchase bonds at a rate of $120 billion a month, according to its latest policy statement.

Central bank officials have pledged to keep interest rates near zero until the U.S. economy has fully recovered from the pandemic-related slowdown. At the Fed’s last meeting, most officials indicated that they expect to keep rates near zero until at least 2023.

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U.S. Economic Growth Slowed at Year’s End

The U.S. economy grew at a 4% annual rate in the fourth quarter, a slowdown from the third quarter’s pandemic snapback that left the country with its steepest contraction since 1946.

Full-year gross domestic product, a measure of the goods and services produced across the economy, declined 3.5% from 2019, the Commerce Department said Thursday. GDP rose 2.2% in 2019.

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Jobless Claims Better Than Expected, but an Economic Recovery Looks Shaky

The number of people newly filing unemployment claims fell last week, but there are still signs that the economic recovery will progress in fits and starts.

There were 847,000 people filing initial jobless claims for the week ended Jan. 23, a decrease from the prior week’s upwardly revised tally of 914,000, according to Labor Department data released Thursday. This was slightly better than the 866,000 new filers economists expected. The four-week moving average of new claims ticked up by 16,250 to 868,000.

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General Motors Sets 2035 Goal for Eliminating Emissions From Most Cars

American auto giant General Motors on Thursday announced that it aims to eliminate emissions-producing vehicles from its light-duty fleet by 2035.

“General Motors is joining governments and companies around the globe working to establish a safer, greener and better world,” CEO Mary Barra said in a statement.

The company made no mention of its plans for its heavy-duty fleet of trucks, and it was unclear whether the change in strategy means it intends to shift exclusively to electric vehicles.

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Apple Earnings Crush Estimates

Apple posted better-than-expected results for its fiscal first quarter as customers snapped up iPhones, Macs, iPads, and other Apple products at an impressive pace. Sales topped Wall Street’s expectations in every category.

Heading into the quarter, Wall Street analysts’ expectations were driven in particular by the potential for a blowout quarter for iPhone sales, after the recent launch of the iPhone 12 lineup. And Apple delivered.

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Facebook’s Strong Results Are Offset by Cautious Comments About 2021

Facebook reported better-than-expected fourth-quarter results late Wednesday, but the company also warned that a technical change in Apple’s mobile operating system could hurt Facebook’s first-quarter results.

Apple plans to make several changes to its forthcoming iOS software that powers the iPhone and iPad, one of which is expected to hurt the ability of platforms such as Facebook to target advertising. Other companies such as mobile videogame developer Zynga have warned of similar issues.

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