U.S. equity markets rallied Thursday as heavy trading in shares of GameStop, AMC and others pummeled those stocks after the names were restricted on several online trading platforms, sparked by Robinhood.
The Dow Jones Industrial Average closed up 300 points or 0.99%, while the S&P 500 and Nasdaq Composite gained 0.98% and 0.50%, respectively. The gains come after the S&P 500 on Wednesday plunged into negative territory for the year.
Early in the session, several online brokers began clamping down on trading in high-flying names like GameStop Corp. that have witnessed extreme volatility amid a short squeeze. Shares of the video-game retailer tumbled over 44%.
Robinhood and other online brokers shut users out of buying shares of companies including GameStop due to the recent volatility. GameStop soared 1,642% from Jan. 12 through Wednesday as short-sellers scrambled to close their losing bets.
BlackBerry Ltd., Bed Bath & Beyond Inc. and AMC Entertainment Group, also got crushed after having some trading of their shares limited.
In economic news, the GDP grew at a 4% annualized rate in the three months through December, according to a preliminary reading from the Commerce Department. The reading was in line with the expectations of analysts surveyed by Refinitiv.
Elsewhere, initial jobless claims fell to 847,000 from an upwardly revised 914,000 the week prior. Wall Street analysts surveyed by Refinitiv were anticipating a decline to 875,000. Continuing claims fell to 4.771 million, below the 5.054 million that was expected.
Looking at stocks, Dow component Apple Inc. reported strong iPhone 12 demand resulted in the company’s first $100 billion revenue quarter in history. Sales across all product categories increased by double digits as profit jumped 35% from a year ago.
Tesla Inc., meanwhile, posted its sixth straight quarter of profitability, but earnings were well below Wall Street estimates. The electric-car maker expects deliveries to grow by at least 50% annually going forward.
Facebook Inc. announced quarterly earnings and sales hit a record in the final quarter of the year, boosted by the stay-at-home work environment caused by the COVID-19 pandemic and online holiday shopping. However, the social media giant also warned its business faces some uncertainty in the form of regulatory investigations and changes to Apple’s operating system that may impact its ad business.
Meanwhile, American Airlines Group shares took off Thursday after the airline reported a narrower quarterly loss than had been anticipated. The stock has been floated as the next possible short-squeeze candidate, following the likes of GameStop Corp.
In commodities, West Texas Intermediate crude oil slid 44 cents to $52.41 per barrel and gold lost $5.60 to $1,839.30 an ounce.
European markets ended mixed with Britain’s FTSE 100 down 0.63% while France’s CAC 40 and Germany’s DAX 30 added 0.93% and 0.33%, respectively.
In Asia, Japan’s Nikkei 225 fell 1.53%, China’s Shanghai Composite lost 1.91% and Hong Kong’s Hang Seng 225 declined by 2.25%.