Wall Street muted, Clover Health leads “meme” rally
Wall Street indexes were flat on Tuesday as investors took to the sidelines ahead of key inflation data this week, while Clover Health led a rally among popular social media stocks.
Shares of the health insurer (CLOV.O) surged more than 50% as it became the new center of attention on social media platforms for individual traders, who have taken to hyping up stocks with large short positions in what they have dubbed “the mother of all short squeezes”.
Broader sentiment was muted as investors awaited further cues on policy tapering from the Federal Reserve after what is expected to be a strong inflation reading on Thursday.
Even then, Wall Street’s so-called “fear gauge” (.VIX) fell to its lowest level since February 2020.
“There is more and more evidence of improving economic momentum. However, even as the market is pricing inflation to be transitory, they now expect the period of inflationary pressures to be slightly longer than initially thought,” said Jon Adams, senior investment strategist, BMO Global Asset Management.
The Fed’s meeting next week is widely anticipated for more cues on policy, given that weak payrolls data – a key factor for the Fed to alter policy – had recently dented expectations of tapering.
At 11:55 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 18.14 points, or 0.05%, at 34,612.10 and the S&P 500 (.SPX) was down 3.17 points, or 0.08%, at 4,223.35. The Nasdaq Composite (.IXIC) was down 8.98 points, or 0.06%, at 13,872.75.
The S&P energy sector (.SPNY) rose 0.7%, and was trading at its highest level in nearly four months, as recent gains in oil prices boosted the space.
But Wall Street appeared to have fallen into a lull this week, having moved little on Monday after surging to record highs through a strong earnings season in May.
“It’s a very good and healthy pause the markets have taken right now and I would expect it to remain range-bound for now until any data that comes as a surprise,” said Sean O’Hara, president of Pacer ETFs in Malvern, Pennsylvania.
Shares of Apple (AAPL.O) rose 0.7% after sources told Reuters the iPhone maker was in early-stage talks with China’s CATL (300750.SZ) and BYD (002594.SZ) about the supply of batteries for its planned electric vehicle.
Advancing issues outnumbered decliners by a 1.33-to-1 ratio on the NYSE, and for a 1.12-to-1 ratio on the Nasdaq.
The S&P index recorded 44 new 52-week highs and one new low, while the Nasdaq recorded 122 new highs and seven new lows.
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