GameStop Soars to Record Highs as Stocks Have Worst Day Since October

Date: 2021-01-27 22:51:28

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Technology companies led a broad sell-off in stocks Wednesday, knocking more than 600 points off the Dow Jones Industrial Average and handing the market its worst day in nearly three months.

Shares of GameStop more than doubled as the money-losing video game retailer remains caught in a tug-of-war between Wall Street institutions and an activist community of online investors. Those investors have bet that hedge funds have put too much money betting against the stock, a concept known as selling “short.” A pair of professional investment firms that placed big bets that GameStop’s stock would crash have largely abandoned their positions.

Boeing dropped 4% after the aircraft manufacturer posted its largest annual loss in the company’s history, mostly due to the grounding of Boeing’s 737-MAX fleet.

Markets have meandered since last week as investors weighed solid corporate earnings results against renewed worries that troubles with COVID-19 vaccine rollouts and the spread of new variants of coronavirus might delay a recovery from the pandemic.

“The real economy isn’t reflective of what’s happening in financial markets and there really is a disconnect there,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “Investors have to be mindful of that gap.”

The fate of President Joe Biden’s stimulus plan, which includes $1,400 checks for most Americans and other support for the economy, remains a question for investors. On Tuesday, Senate Majority Leader Chuck Schumer said Democrats are prepared to push ahead with the relief package, even if it means using procedural tools to pass the legislation without Republicans.

“That’s certainly one of the factors putting a little bit of pressure on markets,” Ripley said. “Maybe that’s just the realization that growth expectations built into market around fiscal stimulus may not come as expected.”

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