Dow Rallies on Tech Strength; GameStop Cuts Some Losses By

© Reuters

By Yasin Ebrahim –  The Dow jumped Thursday, led by a rally in big tech on bullish quarterly earnings and expectations the economy will rebound strongly in the months ahead.

The rose 1.94%, or 589 points. The was up 2.09%, while the gained 1.75%.

Big tech including Apple (NASDAQ:) and Facebook (NASDAQ:) reported better-than-expected results, lifting investor sentiment on growth stocks.

Apple fell 1% despite raking in a record quarter of revenue and earnings that beat Wall Street estimates, led by a revival in iPhone demand as consumers flocked to grab the tech giant’s latest slate of phones launched late last year.

“[W]e believe the path to Apple hitting $3 trillion in market cap is now firmly on track over the next year with a supercycle iPhone release in its back pocket and massive services business worth $1 trillion+ catalyzing shares over the coming quarters,” Wedbush Securities analyst Dan Ives said in a note.

Facebook also beat analysts estimates on both the , though its gloomy guidance on the ad-targeting landscape for 2021 kept a lid on the advance in the social media giant’s shares.

Tesla (NASDAQ:), however, missed on the bottom line, but beat on the top weighed down by lower margin as the company sought to make its electric vehicles more affordable.  Its shares fell 2% but long-term holders will continue to back the stock, Credit Suisse (SIX:) said.

“Given the run in the name, an earnings “miss”, no specific 2021 guidance and potential supply constraints, we could see the stock take a breather. But, to long-term believers, there is likely little to deter their thinking,” Credit Suisse said as it lifted its price target on Tesla to $725 from $700.

Cyclical stocks – those that tend to move in tandem with the economy – also played a roll in the boarder market melt up on bets the economy will likely rebound in the months ahead following the biggest largest annual contraction since 1946.

Fourth-quarter U.S. gross domestic product grew at a 4% annual rate, the Commerce Department said on Thursday. For 2020, however, GDP decreased by 3.5% from the prior year, following a slump in the first and second quarters.

Still, economists continue bet the worst of the pandemic will be in the rear view after the first quarter of the year.

“In terms for the GDP outlook, Q1 growth will be suppressed by the Nov/Dec weakness which has created very negative momentum at the turn of the year. However, if activity inflect in February as we expect, it will create very strong momentum for Q2,” Jefferies (NYSE:) said.

In other news, the battle of Wall Street versus retail continues as the violent swings were seen in cohort of stocks retail-favored stocks like Gamestop, Nokia Corp ADR (NYSE:), and BlackBerry (NYSE:). in premarket action but was soon nursing hefty losses after trading brokerages restricting trading.

GameStop (NYSE:) fell 23% to $265, though had been as low as $112.25. AMC Entertainment (NYSE:) was down 48% to $10.08 though had been as low as $6.51.

A Robinhood user reportedly filed a class-action lawsuit Thursday accusing the trading platform, of breaching its contract by failing to disclose it “was going to randomly pull a profitable stock from its platform,” CNBC reported.