US stocks sank again as a speculative frenzy over GameStop and a handful of other stocks raise concerns about how much damage an online uprising against Wall Street bigwigs can do to the broader market.
The Dow Jones Industrial Average ended the session down 620.74 points, or 2 percent, to 29,982.62, while the S&P 500 fell 1.9 percent, giving the benchmark its biggest weekly loss since October.
Meanwhile, GameStop soared nearly 70 percent on Friday, continuing a saga that captivated and confused many on Wall Street and beyond.
The company is recovering much of its sharp loss from the previous day, after the trading platform Robinhood said it would allow customers to start buying some of the shares again.
The Dow Jones Industrial Average ended the session down 620.74 points on Friday
Meanwhile, GameStop skyrocketed nearly 70 percent on Friday, continuing a saga that captivated and baffled many on Wall Street and beyond
GameStop has gone through a dizzying 1,600% run in the past three weeks and has become the battleground where swarms of small investors find themselves making epic opposition to 1%.
The so-called ‘Reddit rally’ has seen thousands of individual investors take champions on social media forums, such as Reddit’s Wallstreetbets, which has nearly 6 million members, to inflate the stock prices of GameStop and other previously depressed companies.
The attack is aimed directly at hedge funds and other Wall Street titans who have bet that the video game retailer’s stock would fall.
These companies are making heavy losses, and other investors say that is putting pressure on them to sell other shares they own to raise money. This, in turn, helps to pull down parts of the market completely alien to the ongoing revolt by the cadre of smaller and novice investors.
GameStop’s manic moves and some other previously defeated actions have drowned out many of the other issues that weigh on the markets, including the virus, vaccine launches and potential aid to the economy.
Most Wall Street and other market watchers say they expect investors with smaller pockets who are promoting GameStop to be burned.
The struggling retailer is expected to still lose money in its next fiscal year, and many analysts say its stock should be closer to $ 15 than $ 330.
Meanwhile, requests for regulators to intervene are getting higher on Capitol Hill, and the Securities and Exchange Commission says it is carefully monitoring the situation.
“You saw a lot of volatility this week, so when you have some unknowns like what you’re seeing in the world of retail trade, people are a little concerned about high records here and taking some money off the table,” said Megan Horneman, director of portfolio strategy from Verdence Capital Advisors.
GameStop shares are back on the races on Friday, and the US general market is down again, while the saga that captivated and confused Wall Street intensified the drama
The S&P 500 fell 73.14 points to 3,714.24. The week ended with a loss of 3.2 percent, the worst week in three months. January ended with a loss of 1.1%, its first monthly decline since October. The S&P 500 is still up 13.6% since the end of October.
The high-tech Nasdaq compound dropped 266.46 points to 13,070.69. The Russell 2000 index of smaller companies dropped 32.97 points, or 1.6%, to 2,073.64.
Some of the heaviest weights in the index were Apple, Microsoft and other Big Tech stocks that were big winners for professional investors and others last year.
Johnson & Johnson dropped as one of the biggest weights in the Dow and S&P 500 after the drugmaker 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 globally.
The results compare to the limits set by two authorized vaccines from Pfizer and Moderna, which were about 95 percent effective in preventing symptomatic diseases in key trials when administered in two doses. Moderna’s shares rose, while Pfizer’s shares changed little.
Analysts said the results, which would require only one injection instead of the two required by other vaccine manufacturers, were below expectations.