Monday (1st) Retail-led short squeeze turned to silver, Panic Index VIX fell, and the market focus turned to financial report season, Amazon and Alphabet rose before the financial report was released on Tuesday.
The four major U.S. stock indexes closed red collectively, and S&P 500 index hit the largest single-day increase in 12 weeks on Monday, with a drop of 3% last week, the largest drop since October last year. Among them, consumer discretionary products and technology stocks performed the best, and TSMC ADR soared, leading the Feiban Index to rise by nearly 4%.
Reddit Retail investors' epic short squeeze drama continues to go ups and downs.
GameStop (GME-US), which retail investors are crazy about to pursue, fluctuating and falling all the way, once plummeting 34% and temporarily hitting the limit. GameStop (GME-US) fell 31.50% to $225.00 per share. GameStop's stock price soared 1,625% in January. According to S3 Partners, as of the close of last Friday, GameStop's crazy surge has caused hedge fund major investors to lose nearly $20 billion.
Online trading platform Robinhood began to relax trading restrictions on Monday, raising the GameStop trading restrictions from 1 share to 4 shares and 20 shares in the late trading period. In addition, after raising $1 billion from shareholders last week, Robinhood once again received a $2.4 billion investment from shareholders to cope with the recent stock speculation storm of retail investors and increase demand for funds. Paul Gambles, co-founder of
investment consulting firm MBMG Group, said that the retail trading frenzy driven by Reddit may bring systemic risks to the market. Paul Gambles said GameStop stock is absolutely impossible to meet current prices, but those who buy it don’t actually care.
Paul Gambles said that Reddit investment trends could lead to systemic market events, and Robinhood's trading restrictions on various stocks last week implying that if hedge funds start to go bankrupt, it could hit big broker Prime Broker, repeating the 1998 Long-term Capital Management (LTCM) incident.
The stock markets around the world have been affected by the fluctuations of Reddit retail investors in the past week. How speculation continues has sparked a new discussion on economic equality.
was initially intended to make profits from short squeezes, but later turned into a national debate on market access. On Reddit forums such as r/wallstreetbets, retail traders joined forces to push up GameStop, AMC and other highly short stocks, hoping to make a profit when the fund covers its short positions.
Several U.S. brokerages have taken action. Companies such as Robinhood and Interactive Brokers have restricted trading on volatile stocks, believing that these moves protect them and their customers from huge risks. The U.S. Congress is now preparing to hold a hearing on the matter as lawmakers accused the trading platforms of stifling individual investors for the benefit of the powerful group of Wall Street.
In the past few weeks, retail investors have flocked to trading applications such as Robinhood, planning to buy and sell popular stocks such as GameStop and AMC Entertainment. This prompted the NSCC to ask the company to provide more liquidity to mask possible losses.
trading app Robinhood raised another $2.4 billion in new funds from shareholders on Monday. The infusion will allow Robin Hood to meet the requirements of the National Securities Settlement Corporation (NSCC), which requires Robin Hood to provide $3 billion in margin to cover transaction risks. However, the settlement agency has cut that number to $700 million.
On Sunday night, Robinhood CEO Vlad Tenev told Elon Musk during Clubhouse live broadcast that the clearinghouse requirements were "a order of magnitude higher than it usually requires." Denev added that his company had only $2 billion in venture capital at the time.
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