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GameStop Soars, but Rest of Wall Street Is Slammed

Dow falls more than 600 points
By Newser Editors and Wire Services
Posted Jan 29, 2021 3:04 PM CST

(Newser) – GameStop’s stock was back to the races Friday, but worries were growing about how much damage the frenzy over a handful of companies by Main Street investors will do to Wall Street overall, per the AP. The Dow fell 622 points, or 2%, to 29,982; the S&P 500 fell 73 points, 1.9%, to 3,714; and the Nasdaq fell 266 points, 2%, to 13,070. GameStop shot up more than 46% in afternoon trading, clawing back much of its steep loss from the day before, after the Robinhood online brokerage said it will allow customers to start buying the stock again. GameStop has been on a stupefying 1,600% run over the last three weeks and has become the battleground where swarms of smaller investors see themselves making an epic stand against the 1%. The assault is directed at hedge funds and other Wall Street titans that bet the struggling video game retailer’s stock would fall.

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Those firms are taking sharp losses, and other investors say that's pushing them to sell other stocks they own to raise cash. That, in turn, helps pull down parts of the market completely unrelated to the revolt underway by the cadre of smaller and novice investors. The maniacal moves for GameStop and a few other formerly beaten-down stocks has drowned out many of the other issues weighing on markets, including the virus, vaccine rollouts, and potential aid for the economy. “Our consideration is whether this is something that is a long-term influence or contained within a handful of companies,” said Tom Hainlin, national investment strategist at US Bank Wealth Management. Meanwhile, calls for regulators to step in are growing louder on Capitol Hill, and the Securities and Exchange Commission says it’s carefully monitoring the situation.

(Read more stock market stories.)

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