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* Boeing drops record annual losses to delay the 777X
* Microsoft grows after optimistic quarterly results
* GameStop rally cancels hedge funds, lights up briefly
* Dow down 1.54%, S&P 500 down 1.93%, Nasdaq down 1.64% (adds Fed statement, changes online)
NEW YORK, Jan. 27 (Reuters) – US equities fell more than 1 percent on Wednesday, showing a weak reaction to the latest Fed statement as major indices were partially hampered by a drop in Boeing and hedge funds selling long positions for cover a short squeeze.
Shares of video game retailer GameStop Corp and filmmaker AMC Entertainment Holdings Inc more than doubled on Wednesday, continuing a higher torrid race in the past week as amateur investors rallied in stocks, forcing short sellers like Citron to give up losing bets.
“It is feared that some investment funds could quickly close positions as a way to strengthen their cash positions. It’s still the first few days, but we may see an increase in selling pressure, for fear that there might be an exit blow, “said David Madden, market analyst at CMC Markets UK.
Shares have largely retained losses following the Federal Reserve statement. The central bank kept the overnight interest rate close to zero and made no changes to its monthly bond purchases, as expected on a large scale, and pledged to keep this support intact until there is a full economic recovery.
“The statement itself did not contain much new information, but it covered fears that the Fed might consider reducing asset purchases sooner than expected. In any case, the Fed added a statement acknowledging that the pace of recovery has moderated in recent months, “said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.
The Dow Jones industrial average fell 475.41 points, or 1.54%, to 30,461.63, the S&P 500 lost 74.39 points, or 1.93%, to 3,775.23, and the Nasdaq Composite fell 223.16 points, or 1.64%, at 13,402.91.
Both the Dow and the S&P 500 were on the road to the largest daily decline since October 28th.
Meanwhile, Boeing Co fell 2.56% and was among the first attractions on the Dow after the planner took a heavy $ 6.5 billion tax on its new 777X aircraft due to the COVID-19 pandemic and after a two-year safety crisis 737 MAX.
In a week full of quarterly earnings from mega-head companies, Microsoft Corp. grew 0.83% after its results as the software maker continues to benefit from global work and distance learning trends.
Microsoft’s results set a positive tone for other technology-related companies, including Apple Inc. and Facebook Inc., which are due to report quarterly numbers later that day.
These major companies recently returned to favor after the explosive results of the giant Netflix Inc., and as investors abandoned banks related to the economy, energy and low-capitalization stocks.
However, concerns about increased stock market valuations, an increase in the number of coronavirus cases and the uneven distribution of vaccine launches have heightened investors’ concerns about the withdrawal and increased short-term volatility.
Shares of Apple were slightly changed, while Facebook fell 2.56%.
The volatility index of the CBOE market, often used as an indicator for investor anxiety, rose to 29.65, the highest level since December 21.
Walgreens Boots Alliance Inc. jumped 4.80% after the pharmacy chain appointed Starbucks chief operating officer Roz Brewer as CEO.
Decreasing issues outnumbered the NYSE in advance by a ratio of 3.40 to 1; on the Nasdaq, a ratio of 3.52 to 1 favored declines.
The S&P 500 recorded 27 new 52-week highs and no new lows; Nasdaq Composite recorded 155 new highs and 20 new lows. (Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; edited by Diane Craft)