S&P 500 plunges into negative territory for 2021

GameStop shares soared 132%

U.S. equity markets were under pressure Wednesday after the Federal Reserve kept policy on hold and investors grappled with the ongoing short-squeeze in a number of companies' shares.

FED HOLDS RATES NEAR ZERO WITH ECONOMIC RECOVERY WEAK

TickerSecurityLastChangeChange %
I:DJIDOW JONES AVERAGES30932.37-469.64-1.50%
SP500S&P 5003811.15-18.19-0.47%
I:COMPNASDAQ COMPOSITE INDEX13192.345407+72.91+0.56%

The Dow Jones Industrial Average fell 634 points, or 2.05%, while the S&P 500 and the Nasdaq Composite were down 2.56% and 2.61%, respectively. The selling dropped the S&P 500 into negative territory for the year.

The Fed on Wednesday afternoon held its benchmark interest rate near zero, as expected, and reaffirmed its commitment to its quantitative easing measures amid signs of a renewed slowdown in the U.S. economy.

The major averages traded deeply in negative territory throughout the session as investors digested an onslaught of earnings reports as short-squeezes in GameStop and elsewhere continued.

Looking at stocks, Dow component Boeing Co. lost a record $11.9 billion in 2020 as the company’s bottom line suffered due to the pandemic and the grounding of the 737 Max jet. The planemaker said the debut of its 777X jet would be delayed again until late 2023.

TickerSecurityLastChangeChange %
BATHE BOEING CO.212.01-4.44-2.05%

Elsewhere in the Dow, Microsoft Corp.'s quarterly profit rose more than 30% year over year as the COVID-19 pandemic drove demand for its cloud-based products and video games. Both earnings and revenue were ahead of Wall Street estimates.

TickerSecurityLastChangeChange %
MSFTMICROSOFT CORP.232.38+3.39+1.48%

In deals, Allstate Corp. reached a deal to sell its life insurance unit to private equity firm Blackstone for $2.8 billion.

TickerSecurityLastChangeChange %
ALLTHE ALLSTATE CORP.106.60-2.23-2.05%

Meanwhile, the short-squeeze that has boosted GameStop Corp. shares by 642% from Jan. 12 through Tuesday continued as they more than doubled on Wednesday despite hedge fund Melvin Capital, which received a $2.75 billion infusion from other funds, covering its losing position the prior afternoon.

TickerSecurityLastChangeChange %
GMEGAMESTOP101.74-6.99-6.43%
AMCAMC ENTERTAINMENT HOLDINGS INC8.01-0.28-3.38%
BBBLACKBERRY LTD.10.05-0.53-5.01%
BBBYBED BATH & BEYOND, INC.26.86+0.57+2.17%

AMC Entertainment Holdings, BlackBerry Ltd. and Bed Bath & Beyond Inc., also saw shares squeeze higher.

In commodities, West Texas Intermediate crude oil climbed 24 cents to $52.85 per barrel and gold fell $5.80 to $1,844.90 an ounce.

European markets were sharply lower across the board with Germany’s DAX 30 pacing the decline, down 1.81%, while France’s CAC 40 and Britain’s FTSE 100 were weaker by 1.3% and 1.16%, respectively.

In Asia, Hong Kong’s Hang Seng index slid 0.32%, China’s Shanghai Composite edged up 0.11% and Japan’s Nikkei 225 advanced 0.31%.