US indices dropped to record lows on Wednesday, amid concerns about the slow spread of COVID-19 vaccines. Aside from that, investors were closely watching the strong fluctuations in the securities of GameStop and other stocks, for which a large volume of short positions is open.
So, yesterday, stocks of GameStop rose by 135%, while shares of AMC Entertainment soared 301%, continuing last week's rally. In January of this year, the securities of both companies reported growth of more than 800%.
Meanwhile, major US indices have sunk to record lows. In particular, the Dow Jones Industrial Average dropped by 2.1% and reached 30303.17 points, while the S&P 500 fell by 2.6% and hit 3750.77 points. As for the Nasdaq Composite, the index was down by 2.6% and closed at 13270.60 points. All three indices posted the largest declines since October last year.
What were the causes of such resonant drops?
First is the rate of vaccination against COVID-19. The spread of new strains is forcing governments to rush the vaccination of the population, because any delays in the introduction of the drug will lead to the extension of lockdowns and other quarantine restrictions.
AstraZeneca said the problems at its European plant would provoke disruptions in the supply of vaccine to EU countries. In response to this statement, European authorities began to put pressure on representatives of AstraZeneca to obtain vaccines produced in UK factories. However, such could negatively affect the vaccination process in Britain.
Meanwhile, in the US, the same issue is being solved much more successfully. Yesterday, US President Joe Biden announced his plans to purchase additional doses of the vaccine by the end of the summer. This amount, officials say, will be enough to vaccinate most of the population.
Obviously, market participants expected that by the beginning of this year, quarantine restrictions would be eased, not tightened.
The introduction of vaccines is now very critical to economic recovery, especially to those who were suffering from new quarantine barriers.
Another factor that caused the fall of indices was the decision of the US Federal Reserve. At the meeting, representatives announced that they do not plan on changing the current monetary policy, so interest rates will remain unchanged at 0.00-0.25%. However, they also acknowledged some deterioration in the economic situation last month.
Investors also analyzed the financial statements of AT&T, Blackstone and Boeing, as well as the reports of Apple, Facebook and Tesla.
According to the data, Boeing spent around $ 6.5 billion on the new 777X airliner and recorded a rather huge annual loss. As a result, its shares slipped by 3.97%, and is one of the leaders in the Dow Jones decline.
Meanwhile, stocks of Microsoft rose by 0.3%, after reporting a record quarterly sales.
Shares of Walgreens Boots Alliance also jumped by 4.1%, after the company appointed Starbucks COO Rosalind Brewer as its new CEO.
With regards to the commodity market, the cost of WTI crude increased by 0.5% and hit $ 52.85 per barrel, while gold sank by 0.3% and reached $ 1,844.90 an ounce. The yield on 10-year government bonds also declined slightly by 1.014%, and Stoxx Europe 600 was down 1.2%.
As for Asia-Pacific exchanges, Nikkei 225 rose 0.3%, while the Hang Seng index dipped 0.3%. The Shanghai Composite, meanwhile, increased by 0.1%.