Shares fell sharply on Friday, as speculative trading by retail investors increased and continued to unnerve the market.
The Dow Jones Industrial Average lost 720 points, or 2.4 percent, to fall below the 30,000 mark. The 30-share benchmark is on its way to announce its worst day since October. The S&P 500 fell 2.4 percent and the Nasdaq Composite fell 2.6 percent, while Apple fell 4.7 percent and other key technology names fell.
GameStop’s shares jumped more than 70 percent after the trading app Robinhood said it would allow limited purchase of shares and other heavily sold names after restricting access the day before.
Robinhood raised more than $ 1 billion from his existing investors overnight, in addition to accessing bank credit lines, to ensure he had the capital needed to allow some trades on volatile stocks like GameStop again.
Investors are concerned that if GameStop continues to rise so volatile, it could spread across financial markets, causing losses to brokers like Robinhood and forcing hedge funds that bet against stocks to sell others. bonds to raise money.
There are also fears that GameStop mania is a sign of a bigger bubble in the market and that its unfolding could also cause turbulence and hit retail investors hard. Several lawmakers have also called for an investigation into chaotic trade. The Securities and Exchange Commission said on Friday that it will examine the regulator’s actions to find out if the decisions made harm investors.
“There is a lot of leverage in the system, and we are starting to see signs that this excess leverage will be reversed in a way that will create headwinds for the stock market and other risky assets for more than just a few days,” said Matt Maley , chief market strategist at Miller Tabak.
Meanwhile, the results of new tests with the Johnson & Johnson coronavirus vaccine have disappointed some investors, weighing on the broader market. The stock had soared to record highs in the hope that vaccines would be effective against Covid-19 to allow for a smooth economic reopening before the end of the year. New mutations that are more resistant to vaccines may change this optimistic outlook for investors.
It was a volatile week on Wall Street. The Dow Jones lost more than 600 points on Wednesday, suffering its worst sale in three months. Then, the blue-chip benchmark recovered by 300 points on Thursday amid a broad market recovery.