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business Saturday 30 January 2021
GameStop soars again; Wall Street bends under the pressure

By STAN CHOE, DAMIAN J. pected to still lose money
TROISE and ALEX VEIGA in its next fiscal year, and
AP Business Writers many analysts say its stock
Another bout of selling should be closer to $15
gripped the U.S. stock than $330.
market Friday, as anxiety In response, many users on
mounts over whether the Reddit have said they can
frenzy behind a swift, mete- keep up the pressure lon-
oric rise in GameStop and ger than hedge funds can
a handful of other stocks stay solvent, although they
will damage Wall Street often use more colorful lan-
overall. guage to say that.
The S&P 500 dropped 1.9%, This week, Robinhood and
giving the benchmark in- other online trading plat-
dex its biggest weekly loss forms restricted trading
since October. The Dow in GameStop and other
Jones Industrial Average stocks that have soared re-
and Nasdaq each fell 2%. cently, prompting outrage
GameStop shot up nearly from individual investors
70%, clawing back much on Twitter and other social
of its steep loss from the media sites. After easing up
day before, after Robin- on some of the restrictions
hood said it will allow cus- early Friday, Robinhood
tomers to start buying some In this photo provided by the New York Stock Exchange, trader Thomas Ferrigno. left, works on the tightened them again
of the stock again. Game- floor, Friday, Jan. 29, 2021. Associated Press throughout the day, limit-
Stop has been on a stupe- ing the number of Game-
fying 1,600% run over the it’s carefully monitoring the just one shot instead of the on price drops. Stop shares that custom-
last three weeks and has situation. two required by other vac- By rallying together into ers could buy. By 3:03 p.m.
become the battleground “You’ve seen a lot of vola- cine makers, were below these stocks, they are trig- Eastern time, they could
where swarms of smaller tility this week, so when you expectations. gering something called a not purchase any more if
investors see themselves have some unknowns like Elsewhere, investors “short squeeze.” In that, a they already had at least
making an epic stand what you’re seeing in the watched virus infection stock’s price can explode one share.
against the 1%. retail trading world, people spikes in Europe and Asia, higher as investors who Jacob Frenkel, a former
The assault is directed are a little concerned at re- renewed travel curbs and had bet on price declines SEC enforcement attor-
squarely at hedge funds cord highs here and taking negotiations in Washington scramble to get out of their ney and federal prosecu-
and other Wall Street titans some money off the table,” over President Joe Biden’s trades. tor, suggested it may have
that had bet the struggling said Megan Horneman, di- proposed $1.9 trillion eco- The smaller investors, mean- made sense for the market
video game retailer’s stock rector of portfolio strategy nomic aid package. Hopes while, have been crowing watchdog agency to sus-
would fall. Those firms are at Verdence Capital Advi- for such stimulus for the about their empowerment pend trading for up to 10
taking sharp losses, and sors. economy have carried the and saying the financial days in GameStop stock,
other investors say that’s The S&P 500 fell 73.14 points S&P 500 and other major in- elite are simply getting their under its legal authority.
pushing them to sell other to 3,714.24. It ended the dexes back to record highs comeuppance after years Merely monitoring the situa-
stocks they own to raise week with a 3.2% loss, its recently, along with en- of pulling away from the tion, without SEC action, “is
cash. That, in turn, helps worst week in three months. thusiasm about COVID-19 rest of America. like putting safety experts in
pull down parts of the mar- It ended January with a vaccines and the Federal “We’ve had their boot on a permanent front-row seat
ket completely unrelated 1.1% loss, its first monthly Reserve’s pledge to keep our necks for so (exple- in front of a runaway roller
to the revolt underway by decline since October. The the accelerator floored on tive) long that the sudden coaster,” Frenkel said.
the cadre of smaller and S&P 500 is still up 13.6% since its help for the economy. rush of blood to our brains An enforcement investiga-
novice investors. the end of October. Low interest rates from the when we have just a (aster- tion by the agency would
The maniacal moves for Some of the heaviest Fed can act like steroids isk)chance(asterisk) of get- need to determine wheth-
GameStop and a few oth- weights on the index were for stocks and other invest- ting free has made me feel er there were violations
er formerly beaten-down Apple, Microsoft and other ments. ... well, it’s made me feel,” of the securities laws, said
stocks has drowned out Big Tech stocks that have “We are still moving to- one user wrote on a Reddit Frenkel, who heads the
many of the other issues been big winners for pro- wards a recovery from the discussion about Game- government investigations
weighing on markets, in- fessional and other inves- pandemic, just a heck of Stop stock. practice at law firm Dickin-
cluding the virus, vaccine tors over the last year. a lot bumpier than anyone “I’ve been isolated through- son Wright.
rollouts and potential aid The Dow lost 620.74 points had expected,” said Ste- out this entire pandemic Both the Senate Banking
for the economy. to 29,982.62, while the phen Innes of Axi in a re- and live in a state far from Committee and the House
“Our consideration is tech-heavy Nasdaq com- port. home or any sense of com- Financial Services Commit-
whether this is something posite slid 266.46 points to Wall Street’s focus re- munity, “another user re- tee plan to hold hearings
that is a long-term influ- 13,070.69. The Russell 2000 mains squarely on Game- plied. “I’d kind of just... giv- on the GameStop contro-
ence or contained within index of smaller companies Stop and other moonshot en up. These last few weeks versy.
a handful of companies,” gave up 32.97 points, or stocks. AMC Entertain- I’ve started caring again; “The capital markets need
said Tom Hainlin, national 1.6%, to 2,073.64. ment jumped 53.7%, and feeling impassioned again; to be less of a casino and
investment strategist at Other forces also weighed headphone company Koss wanting more again.” more of a place where
U.S. Bank Wealth Manage- on the market. Johnson vaulted 52.5%. After their Most of Wall Street and people ... can invest in
ment. & Johnson fell 3.6% after it success with GameStop, other market watchers say companies that are lead-
Meanwhile, calls for regu- said its vaccine appears to traders have been look- they expect the smaller- ing the new economy,”
lators to step in are grow- protect against COVID-19, ing for other downtrodden pocketed investors who said Rep. Brad Sherman, D-
ing louder on Capitol Hill, though not as powerfully stocks in the market where are pushing up GameStop Calif., who heads the Finan-
and the Securities and Ex- as rivals. Analysts said the hedge funds and other to eventually get burned. cial Services subcommittee
change Commission says results, which would require Wall Street firms are betting The struggling retailer is ex- on investor protection.q