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.
The TSA screened more than 2.2 million airline passengers on Friday, the most since March 2020. Willis Orlando, senior product operations specialist at Scott's Cheap Flights, discusses the impact of the surge on the travel industry as well as travel infrastructure itself.
Stocks began the week closing at session lows on a day when bond yields rose and President Biden decided to stick with Jerome Powell as Fed Chair. Bryan Lee, Chief Investment Officer at Blue Zone Wealth Advisors, joins Cheddar News' Closing Bell, where he breaks down the day's activity and discusses what the Fed now needs to do going forward.
A group of crypto enthusiasts pooled over $40 million dollars in an attempt to win a copy of the U.S. Constitution last week. However, their efforts came up short, as hedge fund billionaire Ken Griffin emerged as the victor in a $43.2 million Sotheby's auction. Matt Cutler, CEO & Co-Founder of Blocknative, joins Cheddar News' Closing Bell, where he explains why ConstitutionDAO ultimately came up short.
Gparency, a company that says its mission is to revolutionize the commercial mortgage industry, raised $15 million in its first funding round - representing the largest ever seed round in the commercial real estate space. Gparency's service will allow landlords and real estate developers to receive funding directly from banks, without the need for a mortgage broker. The company says its new approach will give power back to the consumer. Gparency founder and CEO Ira Zlotowitz joins Cheddar News' Closing Bell to discuss.
President Joe Biden announced Monday he is re-nominating Federal Reserve Chairman Jerome Powell after weeks of speculation that he would choose Democrat and Fed Governor Lael Brainard to fill the role. Biden could be looking for continuity as the U.S. continues to grapple with COVID-19 and high inflation, and investors could be on the same page: markets and treasuries ticked up after the White House made the announcement. MarketWatch Senior Reporter Greg Robb joins Cheddar News' Closing Bell to discuss Powell's re-nomination, what we can expect from the Fed's December meeting, whether it will speed up its taper timeline, and more.
President Joe Biden named Jerome Powell, initially appointed by President Trump, to keep his seat as the chair of the Federal Reserve on Monday amid the ongoing challenges of the pandemic, inflation, and unemployment. David Beckworth, a former international economist for the Treasury Department and a senior fellow with the Mercatus Center, joined Cheddar to discuss what he sees as the practicality of Biden's decision. "What Powell brings to the table is he's built up political capital with Republicans and Democrats," he said. "It's easy for him to get the job done. I think in one way he was the path of least resistance for the president."
As housing prices continues to rise, Tim Rood, managing director at the real estate finance solutions company SitusAMC, joined Cheddar's "Closing Bell" to talk about what is driving up the costs, attributing it to supply chain constraints and regulatory expenses. Rood stated that the federal government's response to the 2008 financial crisis has added to the growing price tags. "The government came down super hard on banks and independent mortgage companies because of the defaults," he said.
Colleen Kelly, CEO of Concern Worldwide US, joined Cheddar to discuss food insecurity concerns as the cost of this year's Thanksgiving dinner has surged amid record inflation. Kelly also talked about the ongoing issues derailing global supply chains and raising food prices, which undercuts efforts to tackle food insecurity in the United States and around the world. "Everything that hits the U.S. hits countries that are in extreme poverty even harder, and as you can imagine there were three major things affecting this in the last year: climate change, COVID, and conflict," she said.
Papa Johns has a new look for its logo, graphics, and storefronts. CEO Rob Lynch joined Cheddar's "Closing Bell" to talk about the timing of the rebrand following its ongoing success through the pandemic. Patrons entering revamped locations will notice a lack of menu boards thanks to customer smartphone use and glass panels to allow customers to watch pizzas being made by hand. "Everyone has a menu board in their pocket in the form of their phone," Lynch said. "Eighty percent of our business is ordered digitally, whether it's web-based or our fastest-growing channel being app-based."
