Sure GameStop (GME) shares fell 60% today, February 2, at the close but that didn’t stop a rally in the broad market.
For the day, the Standard & Poor’s 500 gained 1.39% and the Dow Jones Industrial Average rose 1.57%. The NASDAQ Composite added 1.56% and the NASDAQ 100 matched that gain. The small cap Russell 2000 climbed 1.19%. The iShares MSCI Emerging Markets ETF (EEM) was ahead 1.30% at the close.
In this market, driven so much by cash flows that often have their own logic, it’s hard to say which, is any, fundamental factors powered the days results. It certainly didn’t hurt, however, that President Joe Biden met with 10 Republican senators to discuss a new coronavirus stimulus/relief package–and that no one walked out in a huff. Or that earnings reports for the fourth quarter have generally been stronger than expected. Amazon (AMZN) and Alphabet (GOOG) both were expected to beat analyst forecasts when they reported today after the close–and both companies did exactly that with Amazon reporting a 44% increase in net sales and Alphabet announcing a 45% increase in earnings from the fourth quarter of 2019.
The market also relaxed its volatility worries today. The CBOE S&P 50 Volatility Index fell 15.48% to 25.56 in an indication that traders and investors aren’t inclined to pay to hedge risk. Gold, another hedge against risk, fell 1.37% to $1838 an ounce for April delivery on the Comex.