Wall Street edges higher on tech gains, as meme stocks rally
U.S. stock indexes rose slightly in early trade on Wednesday, driven by gains in heavyweight technology stocks, although investors avoided big bets ahead of key inflation data this week and an upcoming Federal Reserve meeting.
Buying into so-called “meme stocks” by small-time retail investors continued, with the new favorite Clover Health surging 13.8% to a record high.
GameStop – the company most closely associated with the retail rally this year – fell 1.3% ahead of its quarterly results, due after the bell.
The so-called “meme” stocks have dominated trading volumes over the past few weeks, as retail traders take to hyping up stocks with the highest number of short positions.
“It is going to be consistent and the participation is good, but there remains a risk of high speculation and market manipulation within these meme stocks,” said Rob Sechan, managing partner and co-founder of NewEdge Wealth.
Major bank stocks including Goldman Sachs, Citigroup and Morgan Stanley fell between 0.2% and 0.9% as U.S. Treasury yields hit a more than one-month low.
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Small gains in heavyweight technology stocks, particularly the FAANG group, gave the Nasdaq a slight boost.
But Wall Street indexes have moved little this week amid a dearth of cues, with most investors sticking to the sidelines ahead of key inflation data on Thursday.
“I think we are going to remain in a grinding pattern for a bit with investors trying to figure out if inflation is to be more persistent or more transient,” NewEdge Wealth’s Sechan said.
The Fed’s meeting next week is also expected to shed more light on the bank’s policy tapering plans. While inflation has surged in recent months, a sluggish labor market is broadly expected to keep the bank dovish.
At 9:44 a.m. ET, the Dow Jones Industrial Average was down 29.83 points, or 0.09%, at 34,569.99 and the S&P 500 was up 5.17 points, or 0.12%, at 4,232.43. The Nasdaq Composite was up 58.02 points, or 0.42%, at 13,982.93.
U.S.-listed Chinese stocks showed little reaction to a sweeping package of legislation intended to bolster the United States’ capability to compete with Chinese technology, even as the move drew some criticism from Beijing.
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Drugmaker Merck & Co rose 1.9% after it said the U.S. government had agreed to buy about 1.7 million courses of the company’s experimental COVID-19 treatment, molnupiravir, for about $1.2 billion, if it is authorized in the country.
Advancing issues outnumbered decliners by a 1.19-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.55-to-1 ratio on the Nasdaq.
The S&P index recorded 15 new 52-week highs and two new lows, while the Nasdaq recorded 73 new highs and two new lows.
(Reporting by Ambar Warrick and Shashank Nayar in Bengaluru; Editing by Maju Samuel)
