Stocks close lower to finish week down as short squeeze names grab headlines The S&P 500 fell for the day and for the week, which JPMorgan's Head of US Equity Strategy and Global Quantitative Research Dubravko Lakos-Bujas has said "took many by surprise" as "the likely short-lived technical tumble" was accompanied by a "small cap short squeeze, most likely initiated by retail investors whose increased activity has become more interesting." Despite short squeezes receiving "a lot of attention," Lakos-Bujas still thinks improving fundamentals and the COVID-19 outlook, the strength of the U.S. consumer, and the reflation theme "remain the bigger forces at play" to drive further equity upside, the strategist said in a note to investors today. ECONOMIC EVENTS: In the U.S., personal income increased 0.6% in December, and spending dropped 0.2%, both of which were better than forecast. The Chicago PMI jumped 5.1 points to 63.8 in January, which was much stronger than expected. An index of pending home sales dipped another 0.3% in December to a reading of 125.5. The University of Michigan consumer confidence reading slipped to 79.0 in the final January print versus 79.2 in the preliminary reading and 80.7 in December. In energy news, Baker Hughes reported that the U.S. rig count is up 6 from last week to 384 with oil rigs up 6 to 295. Data from the Johns Hopkins Whiting School of Engineering shows there are now nearly 102M confirmed cases of COVID-19 worldwide, including almost 26M in the U.S., and 2.2M deaths due to the disease, including 434,000 in the U.S. In New York, Governor Andrew Cuomo said that, if COVID-19 positivity rates hold, the state will reopen indoor dining in New York City at 25% capacity on February 14. TOP NEWS: The r/WallStreetBets saga continued as shares of GameStop ($GME) and AMC Entertainment ($AMC) jumped a respective 64.6% and 53.7% after trading platform Robinhood announced last night that it would once again allow "limited buys" on these and other volatile names. Commenting on the moves, the U.S. Securities and Exchange Commission released a statement saying it is "closely monitoring and evaluating the extreme price volatility" of a number of stocks this week, adding that such volatility "has the potential to expose investors to rapid and severe losses and undermine market confidence." Later, Robinhood posted an update outlining certain security purchase limits, with the updated share limit for GameStop additions being one share. Shares of Novavax ($NVAX) skyrocketed almost 65% higher after the company reported that its protein-based COVID-19 vaccine candidate, NVX-CoV2373, met its primary endpoint in a Phase 3 clinical trial conducted in the U.K. Novavax reported vaccine efficacy of 89.3% in the trial. In addition, the company also announced "successful" results of its Phase 2b study conducted in South Africa, with the vaccine showing 60% efficacy in that trial. Meanwhile, Johnson & Johnson ($JNJ) shares slid 3.5% after the company announced that the COVID-19 vaccine in development at its Janssen unit met all of its key primary and secondary endpoints in a Phase 3 clinical trial, with results showing the vaccine is 66% effective overall in the study. Of note, Piper Sandler analyst Edward Tenthoff said that Moderna's ($MRNA) mRNA-1273 and Pfizer ($PFE) and BioNTech's ($BNTX) BNT162b2 appear to maintain their competitive advantage in terms of COVID-19 vaccines following the new data from Novavax and J&J. On the earnings front, Eli Lilly ($LLY) shares were 1% lower after the pharma giant reported better than expected fourth quarter earnings and revenue. The company also reiterated its earnings and revenue guidance for fiscal 2021. In other earnings news, shares of Chevron ($CVX) fell 4.3% after the company reported a surprise loss for the fourth quarter, with revenue also falling below consensus estimates. MAJOR MOVERS: Among the noteworthy gainers was Biogen ($BIIB), which rose 5.5% after it announced along with Eisai ($ESALY) that the FDA has extended the review period by three months for the Biologics License Application for aducanumab, an investigational treatment for Alzheimer's disease. 9 Meters Biopharma ($NMTR), which gained almost 30% after Oppenheimer analyst Kevin DeGeeter initiated coverage of the stock with an Outperform rating. Among the notable losers was iRhythm ($IRTC), which declined just under 33% after Baird analyst Mike Polark said that rates posted by Novitas for iRhythm "look really low." Subsequently, iRhythm said it has submitted a meeting request with Novitas and "will provide updates as soon as practicable." Also lower were Charter ($CHTR) and Honeywell ($HON), which fell 7.2% and 3.8%, respectively, after reporting quarterly results. Reviewing Friday's economic data:Personal income increased 0.6% m/m in December (Briefing.com consensus 0.1%) and personal spending declined 0.2% (Briefing.com consensus -0.5%). The PCE Price Index was up 0.4% m/m (Briefing.com consensus 0.3%) and the core PCE Price Index was up 0.3% (Briefing.com consensus 0.1%), leaving the yr/yr rates at 1.3% and 1.5%, respectively.The key takeaway from the report is that it wasn't as bad as feared, which qualifies as good news for a market that has seen a number of economic reports of late not live up to expectations.The Q4 Employment Cost Index increased 0.7% (Briefing.com consensus 0.5%), seasonally adjusted, for the three-month period ending in December 2020 after increasing 0.5% for the three-month period ending September 2020. Wages and salaries, which account for about 70% of compensation costs, rose 0.9%, while benefit costs, which make up the remainder of compensation costs, increased 0.6%.The key takeaway from the report is that compensation costs for civilian workers, private industry workers, and state and local government workers all moderated from the same period a year ago.The final January reading for the University of Michigan Index of Consumer Sentiment checked in at 79.0 (Briefing.com consensus 79.2) versus the preliminary reading of 79.2 and the final reading of 80.7 for December.The key takeaway from the report is that sentiment held relatively steady in January despite rising coronavirus cases/deaths, the insurrection, the impeachment of President Trump, and a deterioration in the labor market.Pending home sales decreased 0.3% m/m in December (Briefing.com consensus -0.5%) following a revised 2.5% decline in November (from -2.6%).The Chicago PMI for January increased to 63.8 (Briefing.com consensus 58.0) from a downwardly revised 58.7 in December (from 59.5).Russell 2000 +5.0% YTDNasdaq Composite +1.4% YTDS&P 500 -1.1% YTDDow Jones Industrial Average -2.0% YTDMarket SnapshotDow29982.62-620.74(-2.03%)Nasdaq13070.70-266.46(-2.00%)SP 5003714.24-73.14(-1.93%)10-yr Note -3/321.079NYSEAdv 865 Dec 2175 Vol 1.6 blnNasdaqAdv 1163 Dec 2575 Vol 7.7 blnIndustry WatchStrong: UtilitiesWeak: Energy, Financials, Consumer Discretionary, Industrials, Information TechnologyMoving the Market-- Weak session to end the week -- Brokerage firms eased some trading restrictions on heavily-shorted stocks, sending these stocks higher-- Johnson & Johnson (JNJ) and Novavax (NVAX) provided encouraging vaccine updates-- Negative earnings reactions Disclosure: I may trade in the ticker symbols mentioned, both long or short. 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