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Summary
- The US benchmark equity indices closed Friday’s trade on a negative note after a rally in select stocks such as GameStop triggered volatility.
- While S&P 500 ended down 1.9 per cent at 3,714.24, Dow Jones Industrial Average closed lower at 620.74 points, or 2 per cent, to 29,982.62. NASDAQ Composite fell 2 per cent to 13,070.69.
- In January, GameStop shares jumped over 1,600 per cent, while AMC Entertainment surged more than 500 per cent.
The US benchmark equity indices closed Friday’s trade on a negative note after a rally in select stocks such as GameStop triggered volatility. The shares of GameStop surged nearly 68 per cent on Friday and 400 per cent last week. The stock rose after commission-free trading app Robinhood said it would allow restricted buying in GamesStop and other scrips.
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The investors are concerned that further volatility amid massive trading in select stocks may negatively impact financial markets going ahead, since hedge funds betting against the stock may be forced to sell other securities to raise cash. Cboe Volatility Index, or VIX, climbed above 33 on Friday.
While S&P 500 ended down 1.9 per cent at 3,714.24, Dow Jones Industrial Average closed lower at 620.74 points, or 2 per cent, to 29,982.62, the first time the index has closed below 30,000 since 14 December 2020. Tech-heavy NASDAQ Composite fell 2 per cent to 13,070.69 after Apple dipped 3.7 per cent.
Worst month since October
The three equity indices slipped over 3 per cent in the week, the worst loss since October last year. In January, Dow Jones and S&P 500 lost 2 per cent and 1.1 per cent, respectively, facing their first negative month since October. However, tech-heavy NASDAQ Composite advanced 1.4 on the month.
READ MORE: Why EOS shares underperformed markets in 2020?
In January, GameStop shares jumped over 1,600 per cent, while AMC Entertainment surged over 500 per cent. The shares of JNJ dipped 3.6 per cent on Friday.
COVID-19 vaccine concerns
There were also some concerns around new trial results from the coronavirus vaccine by Johnson & Johnson, which showed less than convincing results against some variants. The one-dose vaccine showed 66 per cent overall effectiveness in protecting against the deadly virus.
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Global markets
While Europe’s benchmark Stoxx 600 index ended down 1.9 per cent, London’s FTSE 100 benchmark dipped 1.8 per cent. Japan’s Topix declined 1.6 per cent, South Korea’s Kospi fell 3 per cent, and Hong Kong’s Hang Seng closed 0.9 per cent lower. China’s CSI 300 index of Shanghai and Shenzhen-listed shares dropped 0.5 per cent.
READ MORE: Market Update: ASX200 Witnessed a Sharp Fall on January 28, 2021
