
Today, the US Congress's midterm elections will be held. According to pre-election estimates, Republicans can regain control of at least one of the chambers.
If you didn’t know about GameStop before all this fuss over it, we’ll tell you. GameStop is an ordinary American high street shop that sells games, consoles, and other electronic devices. Obviously, the Covid-19 pandemic hit hard such kinds of shops and GameStop was no exception. And who would go buying games in a street shop when everything is sold online?
As you can see, GameStop was having a tough time. Therefore, a lot of hedge funds made bets on GameStop to lose its value and started selling the stock. And GameStop would have really fallen, but, all of a sudden, people in Reddit began discussing this topic, made it trending, and started massively buying GameStop shares.
As a result, the demand raised its stock price enormously, and all the investors, who bet on its dropping, lost billions of dollars. This activity has created a so-called "short squeeze". The short sellers betting against GameStop were forced to buy more GameStop stock to cover their losses. That in turn drove the price even higher, which then again forces more short sellers to cover their losses, which pushes the price up even more.
Some people started buying GameStop just for fun. Others wanted to test what the internet community is capable of. There is even an opinion that it was kind of revenge against the big financial companies accused of the market crash in 2008. Even Elon Musk entered the game with a tweet, which sent GameStop further upwards.
The total cost of all the bets against GameStop reached $5 billion, according to Investopedia. "We're seeing a phenomenon that I have never seen," Jim Cramer, a Wall Street commentator.
GameStop stock jumped more than 822%, from $17.25 at the beginning of the year to a high of $159.18 on Monday. On Thursday, it jumped to $483.00, before halving again. Today it’s trading near $380.00.
All this GameStop chaos made a huge impact on the large-cap indexes. The S&P 500 and Dow Jones both dropped significantly on Wednesday, down 2.6% and 2.1% respectively. Some analysts consider that the index selloff happened because of the investors who took their money out of these indexes to cover short bets made on stocks like GameStop.
Let us finish on a positive note. This situation gave rise to a lot of memes that you can see below.
Today, the US Congress's midterm elections will be held. According to pre-election estimates, Republicans can regain control of at least one of the chambers.
A new week will be interesting as we await Central Banks Meetings, more earnings reports, and NFP. Let's review the main headlines for this Monday as we prepare for volatile days ahead!
Bloomberg says yesterday’s movement was so far the wildest. It was the first time in history for the US500 to crash by 2% and close the day 2.8% above the neutral line. There’re several possible reasons for the move.
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.
Your request is accepted.
A manager will call you shortly.
Next callback request for this phone number
will be available in
If you have an urgent issue please contact us via
Live chat
Internal error. Please try again later
Don’t waste your time – keep track of how NFP affects the US dollar and profit!
Beginner Forex book will guide you through the world of trading.
We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.