A man walks past the Charging Bull statue during a snowstorm, Monday, Feb. 1, 2021, in New York's financial district. (AP Photo/Mark Lennihan)
By Damian J. Troise and Alex Veiga
Stocks notched broad gains on Wall Street Monday, clawing back some of their losses following the market's worst weekly loss since October.
The S&P 500 rose 1.6%. The benchmark index was coming off a 3.3% slide last week, when volatility spiked as online traders hoping to inflict damage on hedge funds fueled a frenzy in GameStop and a few other stocks.
Investors large and small continued to focus those stocks Monday, and GameStop slumped 30.8% to $225 a share, the latest rocky ride for the stock, which ended last year at about $18.
Meanwhile, the price of silver jumped at one point to its highest level in eight years. Analysts said the precious metal became another target for online investors seeking to go up against big Wall Street players.
A measure of fear in the market, the VIX, fell Monday, suggesting some of last week's market jitters were easing, said Pauline Bell, analyst at CFRA Research.
“Today the market is sensing that the heightened volatility that we saw over the last week is reverting to a more settled type of volume,” Bell said. “The market is sensing the return to normalcy.”
The S&P 500 gained 59.62 points to 3,773.86. The Dow Jones Industrial Average rose 229.29 points, or 0.8%, to 30,211.91. The Nasdaq composite climbed 332.70 points, or 2.6%, to 13,403.39.
The gains were broad, with technology companies leading the way higher. Communication stocks and a variety of companies that rely on direct consumer spending such as Starbucks and AutoZone also helped lift the market.
Smaller companies also notched solid gains. The Russell 2000 index of small-cap stocks picked up 52.52 points, or 2.5%, to 2,126.16.
Monday's steep drop in GameStop echoed what has become a typical move for a company that has regularly seen double-digit swings most of the last two weeks. Trading of the retailer was still limited on trading platforms like Robinhood.
Silver for March delivery rose $2.50, or 9%, to settle at $29.42 an ounce. Some analysts called the price jump the latest assault by the smaller investors who sent GameStop soaring recently. But many of those same traders instead called it a trap set by hedge funds to divert their attention away from GameStop, as the saga captivating Wall Street gets even more dramatic.
While volatility eased Monday, analysts said the market is likely to remain choppy as small investors continue to play a bigger role in stock trading than they have in the past.
“Definitely having easy access to information, encouragement on social media and a very easy trading experience has gotten more people involved,” said Sunitha Thomas, national portfolio advisor at Northern Trust Wealth Management. “All of that combined is going to lead to more volatility as investors with a shorter outlook are a bigger part of the daily trading volume.”
Investors are watching negotiations in Washington over President Joe Biden’s proposed $1.9 trillion economic aid package. Hopes for aid, along with the Federal Reserve’s pledge to keep low-cost credit plentiful, have carried the S&P 500 and other major indexes to record highs.
“Ultimately, what’s going to drive this recovery is consumer spending coming back,” Thomas said.
Investors bid up stocks heading into 2021 in expectation the rollout of coronavirus vaccines would allow global business and travel to return to normal. That optimism has been dented recently by new infection spikes and disruptions in vaccine deliveries.
Markets were rattled last week by AstraZeneca’s announcement it would supply the European Union with fewer than half the promised doses, which prompted the EU to impose export controls. On Sunday, AstraZeneca promised to increase European supplies and start delivery earlier. This helped boost shares of European companies on Monday. Germany's DAX rose 1.4%, France's CAC-40 gained 1.2% and the U.K.'s FTSE-100 added 0.9%.
The yield on the 10-year Treasury rose to 1.08% from 1.07% late Friday.
A Senate bill unveiled on Wednesday looks to tackleonline safety for children by regulating Big Tech and social media platforms to deter users from content that can harm their mental health. Irene Ly, a policy counsel for the age-based ratings and review organization Common Sense Media, joined Cheddar News to break down the potential of the Kids Online Safety Act. "We can't be imposing such a big burden on parents to be doing it all on theirselves," Ly said. "I think you also have to keep in mind that parents often didn't grow up with social media, so they don't understand what it's like to be addicted to social media or really understand how they work."
While many still remain skeptical about the metaverse, big tech firms and even one big bank are ready to expand their virtual worlds. Facebook parent company has pivoted so hard it will now call its employees 'Metamates,' and even JPMorgan Chase has created its own digital lounge on one virtual platform. While the sector remains young, there seems to be significant investment opportunity, especially with companies like Nvidia. Adam Johnson, a portfolio strategist at Adviser Investments, joins Closing Bell to discuss which companies could win in this space, consumer appetite, and more.
Marc Blinder, Co-Founder and CEO of Aikon, joins Cheddar News' Closing Bell, where he discusses how his company is helping businesses use blockchain applications without needing to learn the intricacies of the new technology.
The Federal Reserve minutes from its January meeting are indicating it's sticking to an interest rate hike in March, but what does the report coupled with ongoing inflation mean for investors going forward? Scott Brown, a market strategist at LPL Financial, joined Cheddar News to break down the minutes and talk about how investors might navigate the rest of the year. "it seems like the market is kind of inclined to trade off these headlines, really, through the first half of the year," he said. "And then, oh, don't forget, we've got midterm elections, which always tend to add a little bit of volatility in the second half of the year." Brown noted that the path forward for stock investors in 2022 would be "rockier" than last year.
Season 13 "Shark Tank" contestant Tania Speaks secured a $400,000 deal for her Speaks Organic Skincare brand with "Shark" Mark Cuban while also being named one of the best pitches in the history of the show — all at 19 years old. Now 20, Speaks joined Cheddar News to talk about the skincare line, the clean beauty industry, and the moment that host Cuban was moved by her pitch. "I couldn't believe that he got emotional. I'm surprised I held back my tears that long," the young entrepreneur revealed. "It's just amazing for someone else to be inspired by your story, especially Mark Cuban himself."
The media giant formerly known as ViacomCBS has officially rebranded itself as Paramount Global with a focus on its streaming service, Paramount Plus. Naveen Chopra, chief financial officer at Paramount, joined Cheddar to discuss the company’s name change and streaming wars. "There are components of content licensing that we continue to do, either historical arrangements or opportunities to license content that don't really impinge on what we're trying to do with our owned and operated services and that continues to be an important ingredient in our broader financial model," he said. "But our number one priority is putting our best assets on Paramount Plus." Chopra also discussed theatrical release windows before feature films hit its service and the platform's subscription goals.
The recent 7.5% year-over-year increase in consumer prices is the highest since 1982, and drew some strong reactions from investors, with speculations that the Federal Reserve will hike interest rates by 50 points instead of 25. But other analysts believe that the Fed will stick with its original plan of 25 points next month. Chris Vecchio, Senior Analyst, at DailyFX broke down how the Fed could potentially react to the historically high inflation data.
