Along with the Fed, this is the busiest week so far of quarterly earnings reporting season for U.S. companies. Apple and Facebook will report their quarterly results after Wednesday’s closing bell.

More than 100 companies in the S&P 500 are scheduled to tell investors this week how they fared during the last three months of 2020. As a whole, analysts expect S&P 500 companies to say their fourth-quarter profit fell 5 per cent from a year earlier. That’s a milder drop than the 9.4 per cent they were forecasting earlier this month, according to FactSet.

Shares of GameStop soared 121.7 per cent , as the video game retailer remains caught in a tug-of-war between Wall Street institutions and an activist community of mostly online investors. The online investors have bet that hedge funds have put too much money betting against the stock, a concept known as selling “short.” A pair of professional investment firms that placed big bets that GameStop’s stock would crash have largely abandoned their positions.

Boeing shares dropped 3 per cent after the aircraft manufacturer posted its largest annual loss in the company’s history, mostly due to the grounding of Boeing’s 737-MAX fleet.

Markets have meandered since last week as investors weighed solid corporate earnings results against renewed worries that troubles with COVID-19 vaccine rollouts and the spread of new variants of coronavirus might delay a recovery from the pandemic.

“The real economy isn’t reflective of what’s happening in financial markets and there really is a disconnect there,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “Investors have to be mindful of that gap.”

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The fate of President Joe Biden’s $US1.9 trillion ($2.5 trillion) stimulus plan, which includes $US1400 checks for most Americans and other support for the economy, remains uncertain given the slim majority of the Democrats in the Senate. On Tuesday, Senate Majority Leader Chuck Schumer said Democrats are prepared to push ahead with the relief package, even if it means using procedural tools to pass the legislation without Republicans.

“That’s certainly one of the factors putting a little bit of pressure on markets,” Ripley said. “Maybe that’s just the realisation that growth expectations built into market around fiscal stimulus may not come as expected.“

Stock indexes in Europe were also sharply lower. France’s CAC 40 slipped 1.2 per cent , and Germany’s DAX fell 1.8 per cent. The FTSE 100 in London dipped 1.3 per cent.

AP

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