Wall Street’s main stock indexes rallied, led by tech stocks, as investors digested a string of large corporate earnings results and mixed economic data, while short-squeeze concerns appeared to abate.
The tech-heavy Nasdaq Composite Index rose 1.7% and the Dow Jones Industrial Average advanced 1.8%. The S&P 500 Index appreciated 2%.
In earnings news, shares of American Airlines surged more than 9% as the US airline posted a lower-than-feared quarterly loss of $2.2 billion, while sales topped analysts’ expectations. The US air carrier incurred an adjusted loss per share of $3.86, topping analysts’ expectations of a loss of $4.11 per share. Revenue plunged 64% to $4 billion year-on-year, but exceeded the Street consensus of $3.88 billion. The daily cash burn rate fell to $30 million in the fourth quarter from almost $100 million in April 2020.
Meanwhile, Apple stock declined 1.3% despite reporting its largest single sales quarter that exceeded the $100 billion landmark for the first time. Strong sales in every product category, especially 5G iPhone sales, was the main driver of a 34% year-on-year first quarter earnings increase to $1.68, beating analysts’ expectations of $1.42. No formal guidance for the second quarter was provided due to uncertainty over developments regarding the coronavirus.
Shares of Levi Strauss & Co. dropped almost 5% after the jeans giant’s first-quarter guidance fell short of analysts’ expectations. The retailer expects first-quarter adjusted earnings per share to be in the range of $0.20 to $0.24, lagging the Street consensus of $0.33 cents per share. Sales in 1Q of 2021 are forecasted to be down by high-teens in constant currency terms year-on-year. Analysts had projected a decline of 11.9%. The company stated that net revenues, earnings and cash flows, will continue to be significantly adversely impacted for at least the first half of 2021 due to the resurgence in COVID-19 cases.
Tesla was down almost 3% as the electric vehicle (EV) maker’s fourth-quarter earnings missed analysts’ forecasts. The company’s 4Q adjusted earnings of $0.80 per share jumped 95% year-over-year but lagged analysts’ expectations of $1.02. Total sales of $10.74 billion in the quarter came in ahead of the Street’s estimates of $10.47 billion. “While delivery/production numbers were known and beat the Street’s expectations given the current economic backdrop, investors continue to be laser focused on the profitability picture of TSLA,” commented Wedbush analyst Daniel Ives, who has a Hold rating on the stock.
In other news, Nokia pulled back 28% after the Finnish telecom firm stated that is “not aware of any material, undisclosed corporate developments or material change in its business or affairs that has not been publicly disclosed that would account for the recent increase in the market price or trading volume of its shares.” Shares popped more than 38% on Jan. 27 for no apparent fundamental reason. DNB Markets analyst Frank Maao double downgraded the stock to Sell from Buy due to its valuation and called the recent share bonanza “bubble-like behavior.”
Another stock in traders’ spotlight is GameStop. Shares of the video game retailer pushed back 28% at the time of writing. That’s after the stock exploded 1,700% since January 1st in what can only be described as a massive “short-squeeze” caused by day traders and speculators pushing the share price higher and forcing large institutional investors to cover their short positions, further bidding up the price.
AMC Entertainment is yet another name that joined the list of volatile stocks this week. Shares plummeted 51% after jumping a whopping 301% on Jan. 27. The share frenzy came after the cash-strapped theatre operator announced that it has completed a $305 million share sale. Earlier this week, AMC CEO Adam Aron announced that “any talk of an imminent bankruptcy for AMC is completely off the table,” after the company secured $917 million in fresh capital to fund its financial needs “deep into 2021.”