Markets
Tech sell-off brings market down as GameStop stock nose dives
Stocks gave up earlier gains in Wednesday’s afternoon session, as investors sold off tech stocks in favor of those in the energy sector.
The Dow Jones Industrial Average fell 3.09 points, or 0.01%, to 32,420.06, giving up early gains even as investors piled back into economically sensitive sectors on bets for a continuing U.S. economic recovery.
The Dow’s weakness came as reopening trades like airlines and cruise operators reversed earlier strength. Norwegian Cruise Line dropped 4.9%, while Royal Caribbean and Carnival fell 1.9% and 2.8%, respectively. Delta and United Airlines also ended the day lower.
Tesla dropped by nearly 5% on news that it will now be accepting Bitcoin for U.S. EV sales
Pressure on equities came even as bond yields continued to decline from recent highs. The 10-year Treasury yield dipped 3 basis points to 1.61% Wednesday, falling for the third day after the rate hit a 14-month high last week.
Nasdaq Composite dropped 265.81 points, or 2.01%, to 12,961.89, while the S&P 500 lost 21.38 points, or 0.55%, to 3,889.14, unable to halt the prior day’s sell-off.
Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell reiterated their belief that thanks in large part to fiscal and monetary stimulus, the U.S. economy will see marked growth in 2021.
“There’s going to be a very, very strong year in the most likely case,” Powell said.
U.S. crude recently fell 0.72% to $60.74 per barrel and Brent was at $64.22, up 5.64% on the day.
Meanwhile, shares of Reddit-favorite GameStop Corp slumped 34% on Wednesday, a day after the videogame retailer said it might cash in on a meteoric rise in its share price to fund its e-commerce expansion.
GameStop shares remain up over 500% this year, benefiting from a push by retail investors on Reddit forums to drive up prices of heavily shorted stocks.
The company said on Tuesday after reporting quarterly results that it has been considering since January whether to increase the size of the $100 million share sale that it originally announced in December.GameStop had previously decided against the move as it was restricted under U.S. financial regulations from selling shares because it had not yet updated investors on its earnings.
The stock closed at $120.34 on Wednesday before falling an additional 4% in extended trade.
The company on Tuesday reported a ninth straight decline in quarterly sales and said it would close more retail stores and exit unprofitable businesses, underscoring Wall Street’s concerns about its business. Earlier it had also announced that Frank Hamlin, its chief customer officer, will step down on March 31.
On the virus front, AstraZeneca Plc reported a slightly lower efficacy for its vaccine in a U.S. study.
U.S. cases surpassed 30 million as Brazil surpassed 300,000 deaths from Covid-19, the second-most in the world.
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