US stocks sank again as a speculative frenzy over GameStop and a handful of other stocks raise concerns about how much damage an online revolt against Wall Street bigwigs in the wider market can cause.
The Dow Jones Industrial Average ended the session with a reduction of 620.74 points, or 2%, to 29,982.62, while the S&P 500 fell 1.9%, giving the index of reference the largest weekly loss since October.
Meanwhile, GameStop shot up nearly 70% on Friday and continued a saga that captivated and confused many on Wall Street and beyond.
The company is recovering much of its strong loss from the previous day, after the Robinhood trading platform said it would allow customers to repurchase part of the shares.
The Dow Jones Industrial Average ended the session with 620.74 points on Friday
Meanwhile, GameStop shot up nearly 70% on Friday and continued a saga that captivated and confused many on Wall Street and beyond.
GameStop has been at a staggering 1,600% over the past three weeks and has become the battleground where swarms of smaller investors see themselves epicly positioning themselves against the 1%.
The so-called “Reddit rally” prompted thousands of individual investors to defend social media forums such as Redstit’s Wallstreetbets, which has nearly 6 million members, to inflate the prices of GameStop shares and other companies that had been hit. previously.
The assault is aimed directly at hedge funds and other Wall Street titans who had been betting on falling video game retailer shares.
These companies are suffering heavy losses and other investors say this is forcing them to sell other shares they own to raise cash. This, in turn, helps bring down parts of the market completely alien to the ongoing revolt by the group of smaller, novice investors.
The manic moves of GameStop and other previously defeated stocks have drowned out many other issues weighing on the markets, including the virus, the launch of vaccines, and potential aid to the economy.
Most observers on Wall Street and other markets say they expect smaller pocket investors who are pushing GameStop to end up burning.
The distressed retailer is expected to lose money over the next fiscal year and many analysts say its shares should be closer to $ 15 than $ 330.
Meanwhile, petitions for regulators to intervene are growing stronger on Capitol Hill and the Securities and Exchange Commission says it is closely monitoring the situation.
“You’ve seen a lot of volatility this week, so when you have some unknowns like what you see in the retail world, people are a little bit worried about the all-time highs here and about getting money off the table,” Megan Horneman said. director of portfolio strategy at Verdence Capital Advisors.
GameStop shares return to trading on Friday and the U.S. general market falls again as the captivated and confusing Wall Street saga heightens the drama
The S&P 500 fell 73.14 points to 3,714.24. It ended the week with a loss of 3.2%, the worst of the week in three months. It ended January with a loss of 1.1%, the first monthly decline since October. The S&P 500 has continued to rise 13.6% since the end of October.
The high-tech Nasdaq composite slipped 266.46 points to 13,070.69. The Russell 2000 index of smaller firms fell 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 have been big winners for professional and other investors over the past year.
Johnson & Johnson fell as one of the heaviest weights in both the Dow and S&P 500 after the drug maker said its single-dose vaccine was 72% effective in preventing COVID-19 in the United States, at a rate lower than 66% observed worldwide. .
The results are compared with the high bar established by two authorized vaccines from Pfizer and Moderna, which were about 95% effective in preventing symptomatic disease in key trials when administered in two doses. Shares of Moderna rose while shares of Pfizer changed little.
Analysts said the results, which would require only one shot instead of the two required by other vaccine manufacturers, were below expectations.