The Dow fell 1.19% to below 31,000, the S&P 500 fell 0.8%, and Nasdaq fell 0.93%. However, earlier today, Nasdaq had a record high, rising by 1.06% to 13,700. Losses in stock values for American Express(down 3.8%) and Intel(down 3.7%) dragged the market lower.
Biden Plans to Increase Federal Spending on American Goods
Joe Biden is set to sign the “Made in America” executive order, increasing the amount of federal spending that goes to American companies. He wants to close waivers and loopholes that allow more foreign products to be purchased than the import rules state and to create a public website so US companies can more easily see government contracts and make bids. Biden is following Trump’s lead in greater trade protectionism. Indeed, Trump’s plan to review federal contracts and waivers is being criticized by the Biden administration for not being effective enough. Foreign products that companies import tend to be cheaper than American products, so it would be reasonable to expect the prices of common products to increase and stock values of these companies to decrease, as few consumers are interested in paying more for the same products, even if they are made in the US.
Stocks were fairly stable today. The S&P 500 reached a new peak after strong quarterly earnings forecasts from Johnson & Johnson and 3M. Both firms climbed around 3%. Tech stocks are expected to have strong fourth quarter earnings reports.
This was an unusual day for the stock market. The Dow dropped over 600 points, or 2.05%, the S&P 500 dropped 2.6%, and Nasdaq dropped 2.6%. This was partially due to delays in vaccine rollouts, dampening hopes that a return to normalcy would be on the horizon. There was also an increase in panic-buys in stocks like GameStop and AMC stock when some hedge funds rushed to cover their short positions as Reddit users pushed their prices up by 134% and 301% respectively.
The Arms Index for the major stock indicators fell to around 0.200. For many on Wall Street, when the Index falls below 0.500, it is a sign of panic-buying. The Arms Index is the ratio of the number of advancing and declining stocks to the advancing and declining volume(how many times advancing or declining stocks changed hands).
Earnings Report for Boeing
Boeing reported its biggest ever annual loss. The company lost almost $12 billion in 2020. (WSJ, 2021) Total jetliner deliveries more than halved as the airlines were taking thousands of planes out of service and canceling orders for thousands more. The major problem Boeing faced was the security problems with the 737 MAX, and its replacement, the 777X is held back due to regulatory scrutiny.
The Dow rose 2.05%, or 600 points, S&P 500 rose 1.9% and Nasdaq rose 1.34%. Stocks for AMC and Gamestop fell over 30%, as Robinhood blocked trades.
For the first quarter of 2021, Apple reported a record revenue of $111.4 billion, up 21%. Facebook reported higher than expected earnings as well, $28 billion compared to the expected $26.7 billion. The company is starting to shift towards web-based commerce. Apple and Facebook have a privacy conflict, where new technology developments from Apple allow users to opt out of 3rd party apps that collect data. Facebook profits from gaining data for advertisements, and with this change, Facebook’s potential to profit is hurt.
The Dow fell 2.07%, or over 600 points, to less than 30,000. S&P 500 and Nasdaq also fell at around the same percentage. However, shares of Gamestop jumped over 70%, after Robinhood said it would reinstate trading in shares that it curbed on Thursday.
Johnson and Johnson Vaccine
Johnson and Johnson said their experimental vaccine would be 66% effective at protecting people from moderate or severe disease, based on results gained from a large clinical trial. It will be easier for health authorities to administer this shot because it only requires one dose, while other vaccines require two. The company expects to produce over one billion doses this year if it is approved.