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Shares of theater chain AMC, which was on the brink of bankruptcy a few months ago, surged to its highest level in four years on Thursday as investors chased companies that benefited from the economic reopening and resumed trading in “memetic stocks” earlier this year.
The 36% rise came as the U.S. market was volatile. The S&P 500 index closed up 0.1%, while the Nasdaq index closed flat. European stock markets closed slightly higher, while US government bonds weakened.
AMC is one of several companies in trouble Retail investor trading frenzy In January of this year, together with video game retailer GameStop, day traders pushed up stocks and caused significant losses to hedge funds that bet on stocks.
AMC’s stock price has more than doubled this week, up more than ten times from the $2.12 per share at the end of last year.
GameStop’s share price reached a peak of $483 at the end of January. After rising nearly 5% to $254 on Thursday, it has risen by more than 43% this week. By the end of 2020, the stock is $18.84.
Some investors have pointed out that the surge in meme stocks earlier this year and other popular transactions are evidence of a market bubble, but many of these transactions seem to have subsided recently. Special purpose acquisition companies, exchange-traded funds run by Ark Invest’s technology communicator Cathie Wood, and Tesla’s shares all fell sharply.
Christopher Jacobson, an analyst at market maker Susquehanna, wrote on Thursday: “Just this past Monday, we wrote that most of the obvious’bubbles’ have disappeared from the market, especially retail Participation has decreased significantly.” “However, since Tuesday afternoon, we have seen a fairly consistent trend in the performance of retail favorites such as GameStop and AMC.”
Jacobson said that short interest in some of these stocks has risen again, which shows that more investors are betting that the recovery will be short-lived. According to S3 data, the software company BlackBerry’s short position currently accounts for more than 8.8% of the total circulation, up from 8.7% in mid-January.
BlackBerry shares rose 5.6% on Thursday and nearly 10% on Wednesday.
According to Goldman Sachs, the Goldman Sachs index of stocks most frequently mentioned on the popular Reddit page r/WallStreetBets (a gathering place for many new retail day traders) surged by 8.6% on Thursday, marking its biggest one-day gain since March .
The rise in memetic stocks led to a general increase in trading activity on Thursday, with approximately 12.7 billion shares changing hands during the session. This was the busiest trading day in two months, accompanied by a large number of call options purchases, which provided traders with the opportunity to benefit from rising stock prices.
Bloomberg data shows that the so-called put option ratio has fallen to its lowest level since February.
At the same time, the latest number of initial jobless claims in the United States highlights the progress in reopening the economy. In the week ending May 22, the number of new jobless claims dropped from 444,000 a week ago to a pandemic low of 406,000, which was lower than economists’ expectations of 425,000 new applications.
This triggered a sell-off of government bonds. The yield on the 10-year US Treasury bond, which affects global borrowing costs, rose 0.04 percentage points to 1.62%, and then fell back to 1.60%. in the afternoon.
However, investors rushed to buy new seven-year bonds, and the US Treasury Department was able to sell $62 billion in new securities at a yield of 1.285% on Thursday.These auctions attracted attention After the dismal sales of 7-year bonds in February triggered a wave of volatility in the US government bond market of $21 trillion.
European debt also suffered a sell-off, with the UK 10-year government bond yield climbing 0.06 percentage points to 0.82%, and the equivalent German bond yield rising 0.03 percentage points to minus 0.174%.
Charles Hepworth, investment director of GAM Investments, said: “The market remains firmly focused on the employment situation in the United States.” “The trend of rapid improvement will inevitably raise concerns that the Fed will soon have to start talking… He said about Gradually reduce purchases of US government debt.
US President Joe Biden puts further pressure on the bond market Seek permission The federal budget for next year is $6 trillion, which increases the prospect of increasing the supply of national debt to fund infrastructure, childcare, and public works investments.
These measures were released before Friday’s inflation data, which is expected to show that core personal consumption expenditures (the Fed’s most popular measure of price movements) increased by 2.9% year-on-year in April. This will be the strongest annual increase since 1993.
In terms of currency, the pound rose 0.6% to 1.4203 US dollars against the US dollar. The U.S. dollar index, which measures the U.S. dollar against a basket of major currencies, has stabilized near its lowest point in 2021. The euro was basically flat at 1.2199 US dollars.
The global oil benchmark Brent crude oil rose 0.7% to US$69.36 per barrel.
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