Plus, jobless claims rose less than expected, Apple reported blowout first quarter earnings, and GM said it is going all-electric by 2035.
Stocks were higher to start Thursday with the Dow adding 500 points, or 1.5%. The S&P 500 gained 1.4%, while the Nasdaq rose 1%.
Wild. Retail brokerages have restricted trading in GameStop and other stocks caught in a Reddit-fueled frenzy that has captivated the market this week. Robinhood and Interactive Brokers were the first to restrict trading in the stock sending shares from as high as $469 to $132. In addition to GameStop, the wild trading hit other heavily shorted stocks including AMC Entertainment, BlackBerry, and Koss. Another name that’s been swept up in a short squeeze this morning is American Airlines, which rose as much as 26% after being targeted in Reddit’s WallStreetBets forum even after the carrier booked a record net annual loss of $8.9 billion. Helane Becker, an analyst at Cowen & Co, said the gains in American airlines aren’t “fundamentally driven, as American’s outlook is similar to others we have heard during this earnings cycle. The near-term outlook remains challenging and timing of any improvement is still uncertain.” Citigroup’s Stephen Trent said the short squeeze in AAL may be a “retail hijacking in the making,” given American has the highest debt load of any major carrier.
Jobless claims rose less than expected last week. The Labor Department said initial jobless claims totaled 847,000 for the week, lower than economists’ expectations for a reading of 875,000. Continuing claims fell by 203,000 to 4.77 million, while the total number of Americans receiving unemployment benefits rose to 18.28 million. A separate report out this morning showed the economy downshifted in the final three months of 2020 after record third-quarter growth. Gross domestic product expanded at a 4% annualized rate in the fourth quarter, the Commerce Department said. Growth slowed “primarily because consumers paused to catch their breath,” said Chris Low, chief economist at FHN Financial.
Apple reported blowout earnings late yesterday, posting over $100 billion in sales in its first quarter. iPhone sales were up 17% year-over-year in the quarter to a whopping $65.6 billion, while overall sales jumped 21% to $111.4 billion. “This strength in iPhone sales provides evidence for Apple bulls that another iPhone super cycle maybe in the cards,” said Dan Morgan, a senior portfolio manager at Synovus Trust Company, adding that Apple’s last super cycle occurred with the iPhone 6 back in 2014, with launches since then feeling “more like ripples opposed to a wave.” Facebook’s fourth quarter sales jumped 33% as online shopping amid the pandemic fueled demand for digital ads on its social networks. Still, the company warned of “significant uncertainty” in 2021, and said it may not be able to grow as quickly in the second half.
Tesla disappointed in its first quarterly report after being added to the S&P 500, posting mixed fourth quarter results. The electric vehicle maker reported an adjusted fourth-quarter profit of $0.80 per share, falling short of consensus estimates for $1.03 per share and well below the blowout $2.14 from a year ago. While the result still market a sixth straight profitable quarter, it was also the fist time the company missed Wall Street’s forecast since July 2019. Tesla CEO Elon Musk also said during the company’s earnings call that volume production of its class 8 truck, the Tesla Semi, is on hold until the company can make a high volume of its own 4680 battery cells. “Prototypes are easy,” Musk said, “scaling production is very hard.” The company also showed off a major redesign to its electric sedan, the Model S, in its earnings report. The updated Model S is expected to launch later this year, and will start at $79,990.
And General Motors shares are up more than 3% this morning after the carmaker said it plans to end production of all diesel- and gasoline-powered cars, trucks and SUVs by 2035, shifting its entire new fleet to electric vehicles as part of a broader plan to become carbon neutral by 2040. GM also plans to use 100% renewable energy to power its U.S. facilities by 2030 and in global facilities by 2035 – five years ahead of a previously stated goal. “For General Motors, our most significant carbon impact comes from tailpipe emissions of the vehicles that we sell – in our case, it’s 75 percent,” said GM CEO Mary Barra. “That is why it is so important that we accelerate toward a future in which every vehicle we sell is a zero-emissions vehicle.”
Stocks We’re Watching
Cloudera Inc (NYSE: CLDR): Cloudera shares rose as much as 7% yesterday after the cloud company announced that it has successfully completed SOC 2 Type II Service Organization Control (SOC 2) certification for Cloudera Data Platform Public Cloud in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA). “Enterprises are struggling to secure and govern their data, especially in a multi-cloud world. They’re required to secure data within a regulatory framework and many expect to face new data privacy regulations in the near future,” said Eddie Garcia, CIO at Cloudera. “Cloudera Data Platform is trusted by some of the largest companies in the most regulated and sensitive industries and this certification validates our ongoing commitment to data security, governance and privacy.”