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Futures Fall, Europe Tumbles Amid Fears Reflation Trade Is Dead, Short Squeeze Turmoil

US equity futures rebounded from an overnight selloff even as European shares wiped out their gains for the year early on Thursday, soured by Wednesday’s furious sell-off which sent the S&P down 2.6% in its worst rout since October, exacerbated by pandemic lockdowns with no end in sight and as retail traders piled into heavily-shorted companies, sparking losses at hedge funds who are forced to sell their favorite longs and causing turmoil in parts of the market.

Apple reported holiday-quarter sales and profit that beat Wall Street expectations, however, shares of the iPhone maker fell 1.8% premarket. Facebook dipped 0.6% as it warned Apple’s impending privacy changes could hurt revenue by interfering with ad targeting even after soundly beating quarterly revenue estimates. Tesla lost 4.4% after the electric-car maker reported disappointing fourth-quarter results and failed to provide a clear target for 2021 vehicle deliveries. Southwest Airlines’s shares fell 0.2% after the airline posted its first annual loss since 1972 and said it was facing stalled demand in January and February on high levels of COVID-19 cases.

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