Reddit trading frenzy stalls as focus turns to Yellen meeting
Reddit trading frenzy stalls as focus turns to Yellen meeting
(Reuters) - Stocks at the heart of a recent social media-driven buying frenzy were subdued in early U.S. trading on Thursday, a possible signal that wild gyrations which roiled financial markets were fizzling out just as regulators meet to discuss the volatility.
Shares of videogame retailer GameStop Corp were up 4.3% after losing 72% of their value on Monday and Tuesday combined. They closed up 2.7% at $92.41 on Wednesday.
Cinema operator AMC Entertainment - another target of amateur investors on online forums such as Reddit’s WallStreetBets - rose 1.2% following a 15% jump a day earlier. The stock is still down about 56% from last week’s peak of $19.90.
U.S. Treasury Secretary Janet Yellen will meet financial regulators on Thursday to discuss GameStop and the recent market volatility, the Department of Treasury said.
Focus could fall on the online forums where mass buying of GameStop and AMC was discussed last week, and on the ever-larger role played by hedge funds in financial markets.
“Any kind of market distortion by investors agreeing to cause the distortion goes against the smooth and transparent functioning of markets,” said Andrea Cicione, head of strategy at TS Lombard.
“The reason this might not be covered by regulation yet is simply because it has never happened before. But now it might find its way into regulation in a more explicit way.”
Yellen will meet with the heads of the U.S. Securities and Exchange Commission (SEC), Federal Reserve Board, Federal Reserve Bank of New York, and Commodity Futures Trading Commission.
The SEC is reviewing social media posts for signs of potential fraud, Bloomberg News reported on Wednesday.
Meanwhile, Tesla Inc Chief Executive Officer Elon Musk tweeted his support for cryptocurrency Dogecoin, sending its value surging more than 50%. Musk’s tweets about certain companies - including GameStop - and cryptocurrencies have sent their prices soaring in recent weeks.
