What a wild day in the stock market today! We heard from the Federal Reserve, a Reddit darling reported earnings and Robinhood filed for an IPO. What else did the stock market do today? You can dive in with InvestorPlace below.
To start, the stock market had a bad case of the nerves today. After some back-and-forth moves, the major indices all ended in the red. The S&P 500 shed 0.76%, while the Dow Jones Industrial Average shed 0.94%. The tech-heavy Nasdaq Composite lost 1.12%.
So what else did the stock market do today? Here are the top three stories.
What Did the Stock Market Do Today? Cancel Plans.
Is it time to put your bathing suits away in favor of sweatpants and a few more months of staying inside? Apparently some investors think so.
Today brought real ugliness to cruise stocks and airline stocks. Carnival (NYSE:CCL) shares slipped nearly 8%, while Royal Caribbean (NYSE:RCL) and Norwegian Cruise Line (NYSE:NCLH) stumbled more than 5% and 7%, respectively. Airline stocks were certainly not spared. Delta Air Lines (NYSE:DAL), American Airlines (NASDAQ:AAL) and United Airlines (NASDAQ:UAL) all found themselves in the red at the close of the day.
So what brought about this selloff in travel stocks?
Despite the ongoing Covid-19 vaccine rollout, pandemic concerns are still forcing officials to revisit lockdown measures. Germany extended its lockdown for a month today, citing the worsening toll of the United Kingdom virus variant. The U.K. announced new fines for anyone engaging in non-essential travel, hoping to deter a surge in bookings brought about by improving weather. Although we are closer to a return to normal, several roadblocks are still in place for the leisure industry.
What does this mean for investors? Continue to expect volatility, especially in the absence of updated guidance on recreational travel. Although analysts hope the Centers for Disease Control and Prevention will revisit restrictions on cruise operators, it is important to understand that the reopening timeline faces risks.
Powell Walks the Tightrope Again
Jerome Powell has a difficult job representing the Federal Reserve and working to ease investor concerns. Unfortunately, his balancing act today did not quite assuage inflation fears.
Powell testified before the House Financial Services Committee with Treasury Secretary Janet Yellen. Together, they worked to find a balance between economic optimism and a real need for more central bank fuel. They highlighted how certain indicators have improved more quickly than expected, trying to dispel some of the pandemic woes. However, they also had to highlight that the economy does need more juice. One reason? Yellen pointed to the fact that the United States is down about 10 million jobs since pre-pandemic times. The result of this narrative serves to give investors some confidence while also getting Wall Street on board with continued aggressive money measures.
Also in question: inflation. Powell worked to distinguish short-term price changes and long-term inflation concerns. According to the Fed chair, the $1.9 trillion American Rescue Plan will not move inflation into an undesirable range. Instead, what we are seeing now is a momentary jump in consumer prices as we average back up to a targeted inflation rate.
So where do things stand? As we have seen before, comments from Powell sent the major indices into the red. Tech stocks however were winners on Tuesday, apparently gaining from the hopeful messaging and easing 10-year U.S. Treasury note yields. Keep an eye on stocks tomorrow. Investors could change their tune on Powell and move the indices in a more favorable direction.
GameStop Earnings Rick-Rolled Me
GameStop (NYSE:GME) is not exactly a stock that moves on company fundamentals, but retail enthusiasm for the fourth-quarter earnings call was through the roof. After the original investor relations link filled up, secondary streams popped up, as did a few attempts at Rick-rolling eager investors. The question at hand: Is GameStop ready to share more information about its journey to the moon?
- Revenue came in at $2.122 billion, down from $2.194 billion in Q4 2019. GameStop says the difference came from a drop in retail outlets and fewer operating days at European locations.
- Earnings per share came in at $1.34, below estimates for $1.43.
- Global sales increased 175% year-over-year and represented 34% of total sales.
- Comparable-store sales increased 6.5% during the quarter.
- GameStop says it ended fiscal 2020 with $635 million in total cash.
- Additionally its expense reduction initiatives led to $409 million in improvements in 2020.
More important than the numbers, where is GameStop going?
Much to the delight of r/WallStreetBets, GameStop appears to be leaning into e-commerce hopes. The company announced that it was appointing Jenna Owens as its new chief operating officer. Owens has previously held executive roles at Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Additionally, GameStop shared that it is recruiting for senior talent in e-commerce, retail and technology as part of its longer-term turnaround plan. Priorities for fiscal 2021 include investing in technology, improving customer experience, expanding its product offerings and modernizing its fulfillment process.
Although GME stock is slumping after-hours on the earnings miss, it appears that GameStop checked many of the r/WallStreetBets boxes. Keep a close eye on this stock in the coming days.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.