GameStop ends up 7.3pct after wild swings, other 'meme stocks' soar

NEW YORK - GameStop ended 7.3 percent higher on Wednesday after wild gyrations in the resurgent rally that has vaulted shares of the video game retailer and other so-called meme stocks closer to the peaks of late January.

Shares of GameStop closed at $265 following turbulent trading that saw them rise by as much as 41 percent to a peak of $348.50, a move some analysts said was accelerated by bearish investors unwinding bets against the stock.

The rally put the company’s market capitalization at $18.48 billion, making it the biggest listing on the S&P 600 index of small-cap stocks. At their session high, GameStop shares were up 800 percent from last month's low but still 28 percent below their late January peak.

Traders exchanged almost $20 billion worth of GameStop shares, making it the Wall Street session's second most-traded company after Tesla and ahead of Apple.

Other stocks popular with retail investors in forums such as Reddit’s WallStreetBets also enjoyed outsized gains. Headphone maker Koss Corp soared more than 100 percent at one point and cinema operator AMC Entertainment jumped nearly 19 percent before erasing gains.

The moves drew cheers on WallStreetBets and other online forums and eyerolls from other market participants.

"You just have wild speculation .. They're guessing," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management in New York. "I wouldn't touch it with a 10-foot pole right now."

Investors short GameStop shares have incurred over $1.3 billion in losses over the last couple of days, forcing some to abandon their positions and buy back the stock in a phenomenon known as a short squeeze, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

Shorts have covered some 3 million shares over the last seven days, worth $742 million, the firm’s data showed.

"As GameStop keeps going up, we are going to continue to see short-covering as more shorts reach their maximum pain threshold and are forced out of their trades," Dusaniwsky said.

GameStop retains a legion of devout followers after a social media frenzy in January triggered a massive rally in which its shares surged more than 1,600 percent.

That spike triggered a short squeeze that shook hedge funds such as Melvin Capital.

But fuel for further short squeezes may be running out: About 20.5 percent of GameStop's share float is sold short, the lowest in at least three years, according to S3 data.

Market strategists have also said tens of billions of dollars from stimulus checks sent to Americans through U.S. President Joe Biden's coronavirus relief package could find their way into the stock market, including into the "meme stocks" promoted by retail traders online.

GameStop bulls also hope for a profit boost from the transition to e-commerce for the video game retailer, led by shareholder and Chewy.com co-founder Ryan Cohen, who is on the company's board. The company has said it would report earnings on March 23.

Denizens of WallStreetBets exhorted one another to hold on for more gains, while others lamented selling too early.

"Makes (me) physically sick I sold all 39 shares of GME at $120 at a loss cause I thought it wasn’t happening again," Reddit user TheKingTodo wrote.

Separately, on Wednesday, shares of U.S. gaming company Roblox Corp RBLX.N closed up 54.4 percent in its New York Stock Exchange trading debut on Wednesday, valuing the company at $45.2 billion.

-reuters-

US stocks flirt with new records, 5 years after crash

NEW YORK - US markets pushed tantalizingly close to new records this week, a stunning rebound after the steep crash of 2008 wiped trillions of dollars of wealth from Americans' pocketbooks and retirement accounts.

The thrust past 14,000 by the Dow Jones Industrial Average Friday, the first time that level has been seen since October 17, 2007, underscored the spectacular recovery US stocks have made despite the economy's slow growth.

Helped by interest rates still at all-time lows, and US companies still building earnings steadily, analysts said the Dow and the S&P 500 could easily find their way past their all-time highs in the coming month, if not sooner.

Both set fresh post-2007 records Friday, rising more than 1.0 percent for the day on data that, on one hand showed that the US jobs market remains firm, but on the other hand was not strong enough to push the Federal Reserve to tighten monetary policy anytime soon.

The Dow closed the day at 14,009.79, still shy of the October 9, 2007 record of 14,164.53.

The S&P 500 reached 1,513.17, its best close since December 10, 2007 and just 3.4 percent shy of the October 9, 2007 all-time closing high of 1,565.15.

The Nasdaq Composite, at 3,179.10, was still far below its record, hit in March 2000 before the dot-com crash.

Even so, and despite sagging Apple shares, the tech-weighted index was just a few points shy of its post-2000 high reached last October.

All three benchmarks have now more than doubled since hitting their post-crash bottoms in 2009, rewarding the patient investors who hung on in the middle of the economic crisis.

Analysts said that the reentry to the market of those who sat out, both domestic and foreign investors, is supporting the current surge.

"Since the 2007 levels, it has been a tremendous rally," said Mace Blicksilver of Marblehead Asset Management.

"We have this real re-investment by people who sold all their stocks three, four, five years ago and went into safer instruments and are now wanting to get back in."

"A lot of the money that is flowing into the US stock market actually comes from abroad. The US appears to be a safer place than, for example, Europe or the emerging markets," said Greg Peterson of Ballentine Partners.

Also driving the gains have been quarterly reports: most companies reporting in the past two weeks have shown firm profit growth, if not as fast as a year earlier.

"They have cut their debts, they have high levels of profit, and importantly they have liquidity," said Evariste Lefeuvre of Natixis.

The macro-economic picture also looks encouraging. The government's estimate this week that the economy shrank at an 0.1 percent pace in the fourth quarter was brushed off as an anomaly, including by the Federal Reserve itself which blamed it on "transitory factors."

The economy would return to modest growth, the Fed said -- though not by enough for it to raise interest rates.

The jobs data released Friday both confirmed the economy's modest strength -- 2012 monthly job creation numbers were revised upward by 18 percent -- and the still slow pace of growth -- January's jobs were 13 percent down from last year's pace.

Economists remain uncertain on whether growth will pick up pace this year from last year's 2.2 percent.

Some were worried that consumer spending might weaken, and that business investment would slip.

Another factor is the political battle over the deficit.

This week Democrats and Republicans appeared still far apart on a compromise that would avoid sharp budget cuts, known as sequestration, programmed for the end of March.

The cuts, $110 billion for 2013 alone, could pull down overall growth.

"The political situation still remains high risk. The government could really destabilize the economy by failing to address sequestration." Peterson told AFP.

John Praveen, chief investment strategist at Prudential International Investment Advisors, said Friday he expects the markets to keep climbing on the same factors: steady earnings growth, low interest rates, and economic growth picking up with little inflationary pressures.

"These positives are expected to lift S&P 500 index to 1600 by 2013 year-end," he said in a research note.

Even so, he added, US stocks will probably grow slower than other global markets.

"The US is likely to underperform with less safe-haven appeal and valuations expensive relative to other equity markets."

source: abs-cbnnews.com