Wall St tumbles after J&J vaccine data, GameStop effect weighs

Wall St tumbles after J&J vaccine data, GameStop effect weighs

USA stock indexes fell on Friday after COVID-19 vaccine data from Johnson & Johnson hurt sentiment, while worries over a growing standoff between hedge funds and retail investors persisted.

By rallying together into these stocks, they are triggering something called a "short squeeze".

Robinhood will allow limited buying from Friday, it said.

'However, we'd like to warn you about the high risk of long execution disruptions for both buy and sell orders caused by the extreme market activity'.

"I think a lot of investors were discounting the effects of retail to some extent, so they were taken by surprise", said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors in Newport Beach, California.

The firm has tapped at least several hundred million dollars from its bank credit lines, a person with knowledge of the situation said.

He tweeted: "Funny to observe those who blindly believe in the benefit of market liquidity and argue against any restriction on short selling are now lobbying for restriction on retail buying to squeeze them".

New apps like Trading212, Revolut, and Robinhood offer rapid trades to anyone who is interested, often for next to no commission. "We take actions like this seriously, and only initiate them in rare circumstances", said spokesman Thayer Fox, adding that he expected normal trading to resume Friday.

Casey says hedge funds have always been short-selling the video game retailer's stock, borrowing shares and selling them on the market at the current price, then buying them back when the price falls. Traders on the WallStreetBets subreddit claimed these changes in its policy directly corresponded to massive downswings in the price of the stock. The app now counts more than 13 million users.

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Social media chatrooms are beginning to resemble the squawk boxes on trading floors as a new generation of retail traders gains influence.

US Senator Sherrod Brown, incoming chairman of the US Senate Banking Committee, said that he plans to hold a hearing on the "current state of the stock market".

The capital injection is "a strong sign of confidence from investors that will help us continue to further serve our customers", a Robinhood spokesperson later said in an emailed statement.

Before its retreat, GameStop briefly became the biggest stock in the Russell 2000 index of small caps, according to Zerohedge.

"The amount of short-selling was probably higher than any other circumstance that I can remember, and I've been watching the stock market for 52 years", Born says. Robinhood did not respond to requests for comment.

JP Morgan has named 45 stocks that may be susceptible to similar "fragility events" in days to come, including real estate company Macerich Co, restaurant chain Cheesecake Factory Inc and clothing subscription service Stitch Fix Inc.

Douglas Bray, a software developer from CT who's been using Robinhood for about five years, said he plans to withdraw about US$100,000 after the trading restrictions.

Long derided by market professionals as 'dumb money, ' the pack of retail traders, some of them former bankers working for themselves, has become an increasingly powerful force worth 20% of equity orders previous year, UBS data showed.

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