By Liz Moyer
Investing.com -- Stocks roared back on Thursday, with the Dow jumping triple digits, as the controversy over a group of retail traders who forced professional short-sellers into retreat continued.
In a bit of positive economic news fourth-quarter U.S. gross domestic product grew at a 4% annual rate, the Commerce Department said.
Even though output fell 3.5% last year from 2019, economists believe the worst of the pandemic could be over by the end of the first half of this year.
Short-squeeze targets GameStop, AMC Entertainment, BlackBerry (NYSE:BB) and other stocks fell on Thursday, a pause in an extraordinary run up over the last few days. Brokerage firms like Robinhood and Interactive Brokers (NASDAQ:IBKR) put on trading restrictions and raised margins, angering customers.
Will the Redditors be able to fight back Friday? Here are three things that could affect markets tomorrow:
1. Robinhood scrutiny heats up
It wasn’t the only broker to shut down trading in short squeeze stocks GameStop Corp (NYSE:GME), AMC Entertainment Holdings Inc (NYSE:AMC) and others, but Robinhood Markets is taking a lot of the heat.
Lawmakers on both sides of the aisle are calling out Robinhood’s trading restrictions, saying it unfairly froze out retail investors, aka the 2.8 million “little guys” from the Reddit forum WallStreetBets, while professional traders were allowed to trade as normal. It was a rare showing of bi-partisanship. Hearings are being planned on the matter in both the House and the Senate, CNBC reported late Thursday.
Meanwhile, Robinhood faces lawsuits over the restrictions, filed by customers who claim it has failed in its mission to democratize Wall Street. It’s not hurting Robinhood’s ability to get new business. It’s in the top 10 apps on Apple’s iOS, with nearly 4 million users. And later on Thursday, Robinhood said it would allow some trading again in the stocks on Friday.
2. Income and spending data
President Joe Biden wants Congress to pass his $1.9 trillion stimulus spending bill, including checks of $1400 to individuals who meet income limits to help boost the economy. The White House continues to press lawmakers on the package, which is moving somewhat more slowly than hoped.
On Friday, government data on personal income and personal spending come out and might help confirm the idea that households need a boost to revive the economy. Personal income is expected to rise 0.1% from December, while personal spending is seen falling 0.4% in the same time. The data come out at 8:30 AM ET (1230 GMT).
3. Eli Lilly earnings
Earlier this week, Eli Lilly and Company (NYSE:LLY)said its drug cocktail to treat Covid-19 was extremely effective with high-risk patients, adding more optimism about the ability of health professionals to treat infections while vaccines continue to roll out.
Lilly is expected to report earnings per share of $2.37 on revenue of $7.3 billion.