Meme Shares Surge Once more As Reddit Merchants Pile Again In—However Dow Falls 300 Factors

Top line

Major stock market indices pull back Thursday’s gains as vaccine optimism – a massive driver of the year-end market rally – sees some downside while the meme stock rally picks up again after Robinhood decided to re-allow “limited” trading in the Stocks favored by Reddit and hated by Wall Street.

GameStop stocks are up nearly 100% after fueling nearly 50% on Thursday.

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Key factors

Shortly after the market opened, the Dow Jones industrial average fell 301 points, or 1%, the S&P 500 fell 0.8% and the tech-heavy Nasdaq fell 0.3%.

Given the losses in the Dow, Johnson & Johnson shares fell more than 4% after the conglomerate said its Covid-19 vaccine candidate was 66% effective in preventing the disease – much less than the effectiveness reported by the approved Pfizer over 90% and Moderna vaccines.

Novavax, which is listed on the Nasdaq, reported 89% efficacy in its UK Covid-19 vaccine trials, increasing its inventory by an impressive 63%.

Meanwhile, Meme stocks are back on the rise – though still far from their mid-week highs – with GameStop, AMC Entertainment and BlackBerry gaining 95%, 50% and 20%, respectively, as brokers like Robinhood have theirs Huge volume trade restrictions reduce backlash to the decision on social media.

The latest market volatility is also affecting global markets: the Japanese Nikkei 225 ended the day down 1.9%, while the British FTSE 100 fell 1.7% and the German DAX index fell 1.2%.

Key background

After a string of setbacks from everyone including government officials and billionaires, popular online broker Robinhood, who along with other trading platforms enabled much of the trading chaos fueled by Reddit, pulled back from its decision to trade Meme stocks on Blocking Thursday – and now allowed “limited” purchase of such shares. The company raised over $ 1 billion in emergency funds to cushion the blow of an extraordinarily high number of trades this week triggered by Reddit users looking to push Wall Street stores out of their severely shortened trades. Hedge funds have lost billions of dollars as a result, and the market has been on extremely shaky ground ever since.

Crucial quote

“The recovery on Thursday looks a little premature. . . Robinhood and others may have temporarily hit the reset button on the Reddit revolt, but the retail community will not be deterred and the company is gradually reintroducing trading [meme] Stocks, the retail revolution is expected to continue, ”said Craig Erlam, senior market analyst at Oanda, on Friday morning, referring to the near 100% revival of GameStop. “The logic that hedge funds must take profitable long stock positions to cover short losses seems to weigh on markets and the next few weeks could be a wild one,” he adds, noting that it will Problem could be exacerbated if the trading frenzy picks up again or Wall Street losses continue to mount.

Chief critic

“The toxic combination of ongoing massive impulses, the gamification of markets, the entertainment of commerce, and new technological tools – including non-commission trading, fractional shares and social media – that remove guard rails while allowing the rapid spread of misinformation has made situations like GameStop inevitable made, ”said Adam Crisafulli, founder of Vital Knowledge Media, on Friday. “This last phase of market craze is based less on optimism than on cynicism – unlike in the 1990s [tech bubble]Most of the people who take part in the madness now know it’s a joke – they just don’t care. “

tangent

Crisafulli says the “disappointing” results of Johnson & Johnson’s vaccine candidates could trigger sales of epicenter stocks – the ones that have eased the most due to the coronavirus pandemic – but he also notes that “many of those names are on Reddit -Hysteria could be implicated, too, people will be reluctant to aggressively short it. “

further reading

Robinhood raises over $ 1 billion in emergency funds as the platform struggles with Reddit-Fueled Trading Surge (Forbes).

Robinhood To Restart ‘Limited’ Trading In Meme Stocks GameStop, AMC As Reddit Rally Unravels (Forbes)

Meme Stocks Start To Crumble: GameStop Market Value Falls $ 14 Billion, AMC Drops 55% As Dow Jumps 600 Points (Forbes)

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