Stocks rose on Monday, the first session of February, as Wall Street appeared to shake off concerns about a speculative retail trading mania that largely drove the market’s worst weekly selloff since October.
The Dow Jones Industrials rebounded 182.86 points to pause for lunch at 30,165.48, led by Intel and Goldman Sachs.
The S&P 500 gained 53.49 points to 3,767.63. The NASDAQ barrlled up 261.19 points, or 2%, to 13,331.89.
All three major averages slipped more than 3% last week for their worst weekly performance since October. The Dow and S&P also posted losses for January — the first negative month in four — although the NASDAQ did manage to post a gain for the month.
GameStop, the brick-and-mortar video game retailer that has been the center of attention on Wall Street, fell as much as 34% and trading was halted briefly. Last week, the popular stock among retailer investors on Reddit forum WallStreetBets soared 400% amid extreme trading volume and volatility.
Many on Wall Street were spooked by a frenzy of activity among retail traders in heavily-shorted stocks including GameStop and AMC Entertainment, which caused hedge funds to take off risk across the board even if they weren’t directly involved in the trade. Goldman Sachs said that the short squeeze triggered by the buying spree is the most extreme in 25 years. However, some strategists believe it’s unlikely that the impact will ripple through Wall Street and derail the new bull market.
The Reddit boom also seems to be spreading to other areas of the market. Futures contracts for silver surged 11%, the biggest one-day jump in 11 years. The Reddit chat room had multiple active threads dedicated to silver on Sunday night. The phrase ”#silversqueeze” was also trending on Twitter.
AMC jumped another 27% after a 277% rally last week.
Elsewhere, another busy week of earnings is coming up with 99 S&P companies set to report. Alphabet, Amazon, Alibaba, Snap, Exxon, Biogen, Pfizer and Chipotle are among the names set to report this coming week. Thursday is the busiest day of the earnings season.
Meanwhile, a group of 10 Republican senators sent President Joe Biden a letter on Sunday, urging him to consider a smaller, scaled-down COVID-19 relief proposal. His current plan calls for $1.9 trillion in additional fiscal stimulus.
The Republican proposal would reduce the size of a new round of checks Biden wants to send to Americans, from $1,400 per individual to $1,000. It would also make the income limits that determine eligibility for the stimulus payments far more strict. For individual filers the cheques would start to phase out for those making more than $40,000.
Prices for 10-Year Treasurys were higher, lowering yields to 1.07% from Friday’s 1.08%. Treasury prices and yields move in opposite directions.
Oil prices advanced 74 cents to $52.94 U.S. a barrel.
Gold prices added $12.80 to $1,860.10 U.S. an ounce.
