US stocks sank again in a speculative frenzy over GameStop, and a handful of other stocks are concerned about how much damage an online rebellion against Wall Street bigwigs could do to the broader market.
The Dow Jones Industrial Average ended the session with 620.74 points, or 2 percent, to 29,982.62, while the S&P 500 fell 1.9 percent, making the benchmark index its largest weekly loss since October.
Meanwhile, GameStop shot up nearly 70 percent on Friday, continuing a saga that fascinated and confused many on Wall Street and beyond.
The company is recouping much of its hefty loss from the day before, after trading platform Robinhood said it will allow customers to buy back some of its stock.
The Dow Jones Industrial Average closed the session with 620.74 points on Friday
Meanwhile, GameStop shot up nearly 70 percent on Friday, continuing a saga that fascinated and confused many on Wall Street and beyond.
GameStop has seen a mind-boggling 1,600 percent rise over the past three weeks and has become the battleground where swarms of smaller investors find themselves taking an epic stance against the 1 percent.
The so-called ‘Reddit rally’ saw thousands of individual investors become champions on social media forums, such as Reddit’s Wallstreetbets, which has nearly 6 million members, to boost stock prices for GameStop and other previously suppressed companies.
The attack is aimed directly at hedge funds and other Wall Street titans who bet that the struggling video game retailer’s stock would fall.
Those companies are suffering hefty losses, and other investors say this prompts them to sell other stocks they own to raise money. That, in turn, helps bring down parts of the market that have nothing to do with the rebellion going on by the cadre of smaller and budding investors.
The maniacal moves for GameStop and a few other previously downtrodden stocks have drowned out many of the other problems weighing on the markets, including the virus, the rollout of vaccines and potential help for the economy.
Most Wall Street and other market viewers say they expect the smaller investors pushing GameStop to eventually be burned.
The struggling retailer is still expected to lose money in the next fiscal year, with many analysts saying its shares should be closer to $ 15 than $ 330.
Meanwhile, calls for regulators to intervene are getting louder on Capitol Hill, and the Securities and Exchange Commission says it is monitoring the situation carefully.
“ You’ve seen a lot of volatility this week, so if you have some unknowns like what you’re seeing in retail, people are a little concerned about record highs here and taking some money off the table, ” said Megan Horneman, director portfolio strategy at Verdence Capital Advisors.
GameStop’s stock is back to Friday’s races, and the overall US market has plummeted again as the saga that fascinated and confused Wall Street ramps up the drama
The S&P 500 dropped 73.14 points to 3,714.24. It ended the week with a loss of 3.2 percent, the worst week in three months. It ended January with a loss of 1.1 percent, the first monthly drop since October. The S&P 500 is still up 13.6% since the end of October.
The tech-heavy Nasdaq composite slid 266.46 points to 13,070.69. The Russell 2000 index of smaller companies gave 32.97 points, or 1.6 percent, to 2,073.64.
Some of the heaviest weights on the index were Apple, Microsoft, and other Big Tech stocks that have been big winners for professional and other investors over the past year.
Johnson & Johnson fell as one of the biggest weights on both the Dow and the S&P 500 after the drug manufacturer said its single-dose vaccine was 72 percent effective in preventing COVID-19 in the United States, with a lower rate of 66 percent observed worldwide.
The results are comparable to the high bar set by two authorized vaccines from Pfizer and Moderna, which were approximately 95 percent effective in preventing symptomatic disease in key studies when given in two doses. Moderna shares climbed while Pfizer shares changed little.
Analysts said the results, which would require just one injection instead of the two required by other vaccine manufacturers, were below expectations.