Wall St. set to bounce back as small-time traders pile into silver

(Reuters) - Wall Street’s main indexes were set for a higher open on Monday following a steep sell-off last week, as a shift in the retail trading frenzy to silver drove up mining stocks and investors awaited manufacturing data later in the day.

The iShares Silver Trust ETF jumped 9.6% in premarket trading as silver broke above $30 an ounce for the first time since 2013 with an army of retail traders storming into the metal after betting billions of dollars on stocks last week.

Silver miners Hecla Mining Co, Coeur Mining Inc and Wheaton Precious Metals Corp surged between 14% and 32%.

“It’s just a relief rally after the sharp decline on Friday,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Wall Street’s main indexes last week logged their steepest weekly fall since October, as investors digested efficacy data from Johnson & Johnson’s COVID-19 vaccine trial results, while a slugfest between Wall Street hedge funds and retail investors added to volatility.

The CBOE volatility index eased on Monday from three-month highs that were fueled by a surge in shares of GameStop Corp, AMC Entertainment Holdings and others that burnt hedge funds who had bet against the companies. GameStop was down about 1%, while AMC jumped another 25%.

The wild swings in the so-called “meme” stocks dominated news on Wall Street last week, even as Apple Inc, Microsoft Corp and other corporate heavyweights reported quarterly results.

“The sentiment right now is precarious. The market has already discounted a good earnings season and rebound in economic growth based on the vaccination,” Cardillo said.

Of the 184 companies in the S&P 500 that have reported earnings, 84.2% have topped analyst expectations, well above the 75.5% beat rate for the past four quarters, according to Refinitiv data as of Friday.

Focus now turns towards quarterly earnings from Amazon.com Inc and Google-owner Alphabet Inc on Tuesday to wrap up results from the so-called FAANG group.

Meanwhile, market participants also monitored stimulus talks. Ten moderate Republican U.S. senators urged President Joe Biden on Sunday to significantly downsize his sweeping $1.9 trillion COVID-19 relief package to win bipartisan support.

At 08:26 a.m. ET, Dow E-minis were up 216 points, or 0.72% and S&P 500 E-minis were up 33.75 points, or 0.91%. Nasdaq 100 E-minis were up 135 points, or 1.05%.

On the data front, ISM’s survey at 10 a.m. ET is expected to show factory activity ticked lower in January after approaching a near two-and-a-half year high in December.

Electric-vehicle maker Tesla Inc gained about 3% as Piper Sandler raised its price target to the highest among the brokerages covering the stock.