The GameStop Frenzy Hasn’t Ended. Here’s What Happens Now.
GameStop #GameStop
The retail speculative frenzy that has made struggling videogame retailer GameStop the top traded stock in the U.S. for two days running hasn’t stopped in premarket trading.
Or, in the parlance of the Reddit Wall Street Bets message board, the “diamond hands” have the opportunity to make more “tendies.”
GameStop rose as high as $500 in the early hours of Thursday—it was just $65 last week—and another favorite of the message board, Naked Brand Group, jumped 150% in premarket trading. In Sydney, a company that shares the same ticker symbol as GameStop but otherwise has no affiliation, GME Resources, rose 13%.
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This despite the fact the WallStreetBets Reddit message board went private shortly after communications platform Discord shut down their server. Both the SEC and the White House said they were watching the situation. Still, it’s not obvious what securities regulators can do, as Barron’s has reported. (More on this below.)
If there is to be a brake, it could come from the retail brokers where the Reddit-fueled traders place their bets. Already, TD Ameritrade and Charles Schwab put in place restrictions on trading in GameStop and AMC Entertainment. Restricting the use of margin and limiting options activity could tame the speculative frenzy.
For the broader market, forced selling of other stocks looks to have abated. U.S. stock futures were pointing to a steady start after Wednesday’s market tumble.
—Steve Goldstein
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*** GameStop Catches the Attention of Lawmakers, Regulators
GameStop stock’s rapid rise is now under the scrutiny of lawmakers and regulators.
What’s Next: In the case of GameStop, regulators may end up looking for market manipulation—though that can be a hard case to make. “There’s nothing harder to prove than manipulation,” Professor John Coffee of Columbia Law School, an expert in securities law, told Barron’s. “You’ve got to sort the needle out of the haystack.”
—Connor Smith and Avi Salzman
*** Apple and Facebook Post Record Quarters, But Tesla Has a Miss
Big Tech’s profitability hit new highs after a tough day on Wall Street that sent all three major stock indexes down more than 2% as earnings from other big companies disappointed.
What’s Next: The busiest week of earnings season continues Thursday, with results expected from nearly 150 companies including American Airlines, JetBlue, McDonald’s and Visa.
—Ben Walsh
*** Fed Holds Rates Near Zero; Powell Says Vaccine Rollout Will Be a “Struggle”
While noting that the winter surge in Covid-19 cases had caused the economy to slow in recent weeks, the Federal Reserve said it will keep interest rates near zero and continue purchasing $120 billion a month in bonds.
What’s Next: The Fed remains in wait-and-see mode as the economic impact of vaccinations and Biden’s stimulus plan play out. But as the economy recovers, the sea-change in the Fed’s willingness to tolerate more inflation to boost employment will come into play, likely forestalling rate increases longer than in past economic cycles.
—Ben Walsh
*** Holiday Covid-19 Surge Is Waning, But New Worries Cast Doubt on Recovery
The number of daily Covid-19 cases reported in the U.S. and Americans hospitalized with the virus continues to drop as the winter surge in the pandemic appears to have crested despite the stuttering vaccine rollout.
What’s Next: The Biden administration says it will increase weekly vaccine shipments to states by around 16%, but supply will remain a bottleneck. “It will be months before everyone who wants a vaccine will be able to get one,” Andy Slavitt, senior advisor on the White House Covid-19 Response Team, said.
—Ben Walsh
*** Brexit Starts Taking Toll on British Economy
With disruptions at European borders and supply chains perturbed by new tariffs, the U.K. economy has begun to show the negative economic impact of leaving Europe’s single market and customs union at the beginning of the year, several indicators show.
What’s Next: Prime Minister Boris Johnson recently qualified as “teething problems” the many incidents and trade disruptions triggered by the effective start of Brexit. But from British fishermen to City of London finance professionals, many rather expect the government to act to try soften the blow.
—Pierre Briançon
***
Cable companies are introducing data caps—what will it cost if you go over?
If you’re surprised by a high cable bill this month, it could be because you spent too much time on the internet.
A growing number of cable companies are once again beginning to impose so-called “data caps” on their home internet service. As of this month, that list includes Comcast, the largest cable provider in the country.
Beginning on Jan. 1, Comcast reintroduced a data cap on its internet service, limiting households to 1.2 terabytes of data per month. (A terabyte is equal to 1,000 gigabytes). The cap is currently enforced in 27 states across the country—Comcast operates in 39 states—though the company told Consumer Reports that it won’t begin charging customers who go over their allowance until March.
When the charges do come into play, they could add up quickly. People who exceed the cap will be charged $10 for every 50 gigabytes of excess data, up to $100 per month. The company does not prorate this amount in cases where a household doesn’t use up the full 50 gigabytes of extra data they were charged. (Comcast did not immediately respond to a request for comment.)
Many companies signed onto a pledge at the start of the pandemic to waive their data caps and boost internet speeds as households were doing more work from home, but as the pandemic has worn on many have returned to their typical operations.
Read more here.
—Jacob Passy
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—Newsletter edited by Matt Bemer, Anita Hamilton, Ben Levisohn, Mary Romano, Stacy Ozol