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Wall Street closed higher on Friday, concluding a week of high volatility that led the US market to its worst performance since last October, due to concerns caused to investors by the extreme fluctuations of individuals, ordered “strongly” an unexpected “wave. “of interest to small investors.
Concerns have been heightened today over the slow pace of vaccination programs around the world, a development that has rekindled fears that the economic recovery will be slower than recent coronavirus vaccines had recently predicted.
After yesterday’s uptrend, Wall Street came under pressure again on Friday as the rally in prices of a small group of significantly ranked stocks, such as GameStop, continued to remove “oxygen” from the market, as several hedge funds hedged their market opening. positions and reduced its exposure to other securities to reduce its risk.
GameStop shares rose 68% on Friday after online trading platform Robinhood announced that it would allow limited purchases of shares, dragging down other classified stocks. Robinhood cut trading in GameStop shares and other classified stocks on Thursday following a wave of buying by individual micro-investors coordinated through the public forum Reddit, a development that led to the drop in those shares.
Today, however, the stock rallied again after Robinhood announced that it had raised $ 1 billion from investors to bolster its balance sheet as it tried to overcome restrictions on trading in high-volatility stocks.
The company also raised another $ 500 million through lines of credit to ensure it has the necessary funds to continue allowing its clients to trade stocks in companies such as GameStop and AMC Entertainment.
The frenzied but volatile rally in these stocks raises concern among investors who fear it could spark wider upheaval, forcing stock brokers like Robinhood to post losses, but also hedge funds to bet against others to raise cash to fill your vacancies.
There are also fears that the “GameStop frenzy” is a sign of a larger market bubble that could also lead to a broader recession and hit microinvestors hard.
Meanwhile, investors are watching with concern the latest vaccine fronts, especially as coronavirus mutations appear to be more difficult to manage, raising hopes for a smooth opening of finances before the end of the year.
Concerns increased with Johnson & Johnson’s announcement that its single-dose coronavirus vaccine was 66% effective against coronavirus infection overall, 85% effective in preventing serious illness and 100% effective in preventing disease. hospitalization and death.
However, its effectiveness has been lower in some areas, especially those dominated by the most contagious coronavirus mutations, indicating that dealing with these strains will be more difficult. The company, for example, said its vaccine was 72% effective in the United States, 66% in Latin America but 57% in South Africa.
Indicators – statistics
In the midst of this climate, the Dow Jones today registered a drop of 620 points or 2.03% and closed below 30,000 points and specifically at 29,982.62 points, expanding its weekly losses to 3.3%. Today’s “dip” evaporated the monthly gains of the index that ended in January with a 2% drop.
It should be noted that of the 30 stocks that make up the blue chip index, only McDonalds shares closed with a positive sign, posting gains of 0.49%. All other stocks closed in the “red” numbers, losing 0.42% (Salesforce) to 4.56% (Dow Inc.).
The broader S&P 500 fell 1.93% to close at 3,714.24 points, also losing 3.3% for the week. Like the Dow, the S&P 500 turned negative monthly, ending 1.1% lower in January.
Finally, the Nasdaq closed 266.46 points lower at 13,070.69 points, with losses of 2%, expanding its weekly losses to 3.5%. However, thanks to its strong gains since the beginning of the year, the technology index said goodbye in January with gains of 1.4%.
In individual stocks, Novavax’s stock closed with 65% gains after the company announced yesterday that its candidate coronavirus vaccine is 9% effective, although its effectiveness against the new mutation is lower.
In terms of stocks that have been in the spotlight this week, GameStop’s stock as mentioned above posted gains of 67.87% today, expanding its weekly earnings to 400%, while AMC Entertainment’s share jumped 53.65%, with his weekly earnings reaching 278%.
Macro
At the end of the day, data released today showed that consumer spending fell 0.2% in December.
American household income increased 0.6%.
