US open: Stocks head south as volatile week gets set to draw to a close

Wall Street stocks were in the red at the start of trading on the final day of what has been a volatile week for markets.

As of 1545 GMT, the Dow Jones Industrial Average was down 0.73% at 30,380.52, while the S&P 500 was 0.72% softer at 3,760.05 and the Nasdaq Composite came out the gate 0.70% weaker at 13,243.16.

The Dow opened 222.84 points lower on Friday, cutting into gains recorded the day before.

Shares in GameStop were again in focus on Friday after Robinhood limited buying of the stock and other heavily shorted names after it raised more than $1.0bn from existing investors overnight to ensure it had the capital required to continue trading.

Market participants are concerned that if GameStop shares carry on with their meteoric rise in such a volatile fashion, it could force hedge funds who short the stock to sell other securities in order to raise cash or even be a sign of a larger bubble set to burst and hit retail investors.

On the earnings front, Caterpillar beat quarterly profit estimates on Friday morning, while Chevron posted a fourth-quarter loss of $665.0m, a marked improvement on the $6.6bn loss reported for the same period a year earlier.

Eli Lilly earnings also beat estimates on the back of Covid-19 antibody sales, while Honeywell was in the green on the back of its own quarterly profit and sales beats.

Turning to the coronavirus pandemic, Novavax stated overnight that its Covid-19 vaccine was more than 89% effective in phase three clinical trials conducted in the UK, while Johnson & Johnson said its one-shot vaccine candidate was 85% effective in preventing severe illness.

The US has now recorded more than 26.33m total cases of Covid-19, claiming the lives of more than 443,769 Americans in the process.

On the macro front, personal income increased $116.6bn in December, according to the Bureau of Economic Analysis, while personal consumption expenditures decreased $27.9bn.

Elsewhere, January's Chicago PMI Jumped to 63.8, according to MNI, rising 5.1 points to its highest level since July 2018, boosted by a pick-up in activity at the beginning of 2021.

Still on data, the University of Michigan's January consumer sentiment index fell to 79 from a preliminary reading of 79.2 earlier in the month and 80.7 in December.

Lastly, pending home sales remained steady in the final month of 2020, according to the National Association of Realtors, sliding 0.3% to 125.5 in December - less than the 1% drop expected by economists.