Big Tech leads stocks to broad gains; GameStop, AMC tank

Big Tech companies and banks helped power a broad rally on Wall Street Tuesday, though shares in GameStop and other recent high-flying stocks hyped by online traders plunged.

News 12 Staff

Feb 2, 2021, 10:46 PM

Updated 1,168 days ago

Share:

Big Tech leads stocks to broad gains; GameStop, AMC tank
Big Tech companies and banks helped power a broad rally on Wall Street Tuesday, though shares in GameStop and other recent high-flying stocks hyped by online traders plunged.
The S&P 500 rose 1.4%, extending gains from a day earlier, as investors sized up the latest batch of company earnings reports. Rising crude oil prices and solid earnings results helped lift energy companies, including Exxon Mobil and Marathon Petroleum. Treasury yields rose and the VIX, a measure of fear in the market, fell sharply, a sign volatility was easing.
The wave of buying coincided with a skid in GameStop and AMC Entertainment, stocks that have been caught up in a speculative frenzy by traders in online forums and on social media who seek to inflict damage on Wall Street hedge funds that have bet these stocks would fall. The price of silver, which spiked 9% Monday, fueling speculation the precious metal was also being hyped up by online traders, sank by more than 10%.
“Certainly, there’s been some profit-taking in these names,” said Ross Mayfield, investment strategist at Baird. “You saw with silver, there was an attempt to try a similar cornering of the market, and that didn’t even last two days.”
The S&P 500 index rose 52.45 points to 3,826.31. The Dow Jones Industrial Average gained 475.57 points, or 1.6%, to 30,687.48. The tech-heavy Nasdaq composite climbed 209.38 points, or 1.6%, to 13,612.78. The Russell 200 index of smaller companies also rose, adding 25.28 points, or 1.2%, to 2,151.44. The major indexes remain near their all-time highs set last month.
Treasury yields rose in another sign of investor confidence. The yield on the benchmark 10-year Treasury note rose to 1.10% from 1.06% late Monday.
GameStop plunged 60% to $90 a share, and AMC Entertainment lost 41.2% to $7.82 a share. Both companies have been in the spotlight for more than two weeks as an online community of investors pushed the stocks to astronomical levels.
Trading in those and several other stocks have been restricted by the popular online trading platform Robinhood since last last week following the bouts of extreme volatility. Robinhood needed to secure funding in order to meet deposit thresholds required by organizations that handle the trading orders placed by investors on its platform.
Robinhood eased some of the trading limits on GameStop and select other stocks Tuesday. For example, it now allows users to buy up to 100 shares and options contracts in GameStop and 1,250 in AMC. On Monday, the brokerage was limiting users to 5 shares in GameStop and 75 in AMC.
An online army of traders using the online site Reddit banded together for the past two weeks to snap up shares of GameStop, AMC and other struggling chains, stocks that have been heavily shorted (bets that the stock will fall) by a number of hedge funds. In the process, they’ve done heavy damage to those hedge funds in a stunning reversal of financial power on Wall Street.
But it's not clear how much longer the Reddit traders can hold the line. Intense media and Wall Street interest pushed many traders into these stocks late last week, with GameStop going as high as $483 last Thursday. They began trading this year at just over $17 a share. The huge run-up in the stock price appears to have little to do with the future prospects of the mall-based retailer, which has been losing money consistently.
While a lot of people seem to be holding a line on some of these positions, the broader market is not showing many signs of strain because of it, said Darrell Cronk, chief investment officer of Wells Fargo Wealth and Investment Management.
“I hope the markets are moving away from some of the issues it dealt with last week and focusing on more of the true fundamentals,” Cronk said.
Uber rose 7% after the company said it would buy liquor delivery service Drizly for $1.1 billion in cash and stock. Solid earnings reports helped lift shares for several companies. Lab equipment maker Waters rose 8.4% for the biggest gain in the S&P 500 after easily beating analysts’ fourth-quarter profit and revenue forecasts. Exxon rose 1.6% and Marathon Petroleum rose 3.9%.
Investors continue to focus on Washington. President Biden invited 10 moderate Republicans to the White House to discuss his proposed $1.9 trillion economic aid plan. Republicans earlier countered with an offer of $600 billion, or less than one-third of Biden's proposed amount.
Investors bid up stocks heading into 2021 in expectation the rollout of coronavirus vaccines would allow global business and travel to return to normal. That optimism has been dented by infection spikes and disruptions in vaccine deliveries.


More from News 12
1:26
Bronx borough presidents wants public feedback on 4 new Metro-North stations coming to the Bronx

Bronx borough presidents wants public feedback on 4 new Metro-North stations coming to the Bronx

1:45
Officers arrest 43-year-old Bronx man connected to Bay Ridge bar fatal stabbing

Officers arrest 43-year-old Bronx man connected to Bay Ridge bar fatal stabbing

1:48
Clear sky and warm conditions today for NYC; tracking rain and cooler weather on the way

Clear sky and warm conditions today for NYC; tracking rain and cooler weather on the way

Guide: Alcohol addiction recovery support and resources

Guide: Alcohol addiction recovery support and resources

0:27
Jets 'return to roots' with new uniforms that pay tribute to team's 'New York Sack Exchange' look

Jets 'return to roots' with new uniforms that pay tribute to team's 'New York Sack Exchange' look

1:37
Police: 1 man dead, another in critical condition in Mott Haven shooting

Police: 1 man dead, another in critical condition in Mott Haven shooting

0:45
NYPD: Protesters along Brooklyn Bridge arrested for blocking traffic

NYPD: Protesters along Brooklyn Bridge arrested for blocking traffic

1:51
Seniors staying fit through free program in the Bronx

Seniors staying fit through free program in the Bronx

2:32
Community advocates rally and call for changes in aftermath of NYPD's decision in Kawaski Trawick case

Community advocates rally and call for changes in aftermath of NYPD's decision in Kawaski Trawick case

2:03
Black Maternal Health Week: Mother discusses how her pregnancy inspired her to become a doctor

Black Maternal Health Week: Mother discusses how her pregnancy inspired her to become a doctor

1:36
It’s Tax Day: Bronx accountant breaks down what you should know

It’s Tax Day: Bronx accountant breaks down what you should know

1:22
City announces Project Home program to combat domestic violence

City announces Project Home program to combat domestic violence

1:20
Scholar Athlete: Hunter Burgos

Scholar Athlete: Hunter Burgos

1:59
'I can't even use my bedroom.' Mott Haven resident details slew of problems plaguing her apartment

'I can't even use my bedroom.' Mott Haven resident details slew of problems plaguing her apartment

0:39
Police: 2 suspects wanted for stealing clothes at Foot Locker in Melrose

Police: 2 suspects wanted for stealing clothes at Foot Locker in Melrose

2:02
Plan to bring 4 new Metro-North stations in the Bronx to be discussed at public hearing

Plan to bring 4 new Metro-North stations in the Bronx to be discussed at public hearing

0:25
Police: Man who punched 9-year-old girl at Grand Central Terminal arrested

Police: Man who punched 9-year-old girl at Grand Central Terminal arrested

0:43
NYPD: Victims identified, arrest made in Fordham crash that killed 2

NYPD: Victims identified, arrest made in Fordham crash that killed 2

1:22
FDNY: Cement truck overturns on Cross Bronx Expressway entrance ramp in West Farms

FDNY: Cement truck overturns on Cross Bronx Expressway entrance ramp in West Farms