GameStop plunges on day-trader day for S&P 500

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GameStop plunges on day-trader day for S&P 500

- For all the back-room arguing about meme stocks in the recent weeks, it was on a day that the day-trader favourites of the S&P 500 Index climbed to its first record since early May.

Tech shares sank 0.8%, led by the stalwarts Amazon.com Inc. and brought the benchmark for American equities to an all-time high of 4,239. 18 GameStop Corp. plunged 27% and Goldman Sachs Group Inc. sank 13%, dragging a stock of meme stocks to a 6% loss on Thursday.

For months, the broad market remained in a limited range as Day traders flocked to short actions to profit from elevated movements to generate short interest. This split performance reversed Thursday as investors brushed aside stronger-than-expected inflation figures and bet that the Federal Reserve will keep its ultra-accommodative policies. Meanwhile, GameStop launched the retreat in retail favorites after the company said it wanted to sell more shares and offered fewer details about its turnaround strategy.

'The market is higher today because big parts of the market like big tech are getting some reprieve from lower rates while less sensitive equities are still getting help, said Tallbacken Capital Advisors' Michael Purves. '' It's largely a win-win day for the wider market and if AMC and GME are down a lot, it is really a sideshow.

Seven of the industries in the S&P 500 were up and scored the benchmark, which was above the previous record notched in early May. Nasdaq100 climbed 1.1% to the highest level since April.

By contrast, the Day-traders darlings fell back to Earth. The first meme-stock icon, GameStop, dropped the most since March, cutting its 2021 advance by 1,070% to 40%. AMC, another headliner in the 2018 retail mania, fell for a second day by over 10%, reducing its year-to-date gain to 1,919%. Workhorse Group Inc., an electronic car maker that is almost down in the past month, has doubled and fell 11%.

'Tech megacaps fell out of love because of a change of name and that could be beginning to reverse, said Robert W Baird Co. 'These megacaps are not in the same category as AMC and GameStop, meaning we probably already have big institutional names behind today's jump.

More stories like this are available on bloomberg.com.

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