Dow slides 200 points on concerns of retail investors' speculative trading
- US equities slid on Friday as investors braced for more day-trader-fueled volatility and balked at Johnson & Johnson's COVID-19 vaccine data.
- Reddit traders drove GameStop, AMC, and others higher after brokers removed some trading restrictions.
- Johnson & Johnson said its vaccine was 66% effective, but data suggests the shot is less beneficial against the virus strain first identified in South Africa.
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US stocks fell on Friday as investors shunned retail traders' speculative bets and disappointing vaccine data from Johnson & Johnson.
GameStop, AMC, and other Reddit-favorite stocks rebounded as day traders piled back into their risky positions. The highly volatile names have taken center stage in the market, and moves from Robinhood, Interactive Brokers, and other platforms to restrict trading have been met with calls for congressional hearings and reform.
Market participants fear that the retail traders' targeting of shorts could force hedge funds to cover their bearish bets by selling their long positions. While the phenomenon has rocked only some funds, strategists have raised concerns about a growing market disruption.
Here's where US indexes stood soon after the 9:30 a.m. ET open on Friday:
- S&P 500: 3,764.60, down 0.60%
- Dow Jones industrial average: 30,397.10, down 0.67% (206.26 points)
- Nasdaq composite: 13,297.82, down 0.31%
Read more: GameStop has surged more than 600% in the past week. 3 experts break down where the stock could go from here as Reddit's army of traders take profits and search for its next targets.
"It was already becoming apparent that stock
Johnson & Johnson announced on Friday that its single-dose COVID-19 vaccine was 66% effective, well below the efficacy demonstrated by other companies' two-dose programs. Johnson & Johnson said its vaccine was also less effective in South Africa, suggesting the shot is less beneficial at protecting against the more contagious virus strain first identified in that country.
Stocks soared to record highs throughout January on the hopes that vaccine rollouts and stimulus from the Biden administration could accelerate the US economic rebound. Johnson & Johnson's announcement underscores the difficulty in ending the pandemic and reaching herd immunity.
Johnson & Johnson sank on the news.
Read more: A Wall Street firm tweaked the Shiller PE ratio to create a superior gauge of the strongest stock-market returns - and broke down why the beloved metric won't cut it anymore
Bitcoin surged above $38,500 for the first time since January 15 after Tesla CEO Elon Musk added "#bitcoin" to his Twitter bio. The most popular cryptocurrency hovered at about $32,000 for about a week after soaring to record highs at the start of the new year.
Spot gold climbed as much as 1.6%, to $1,874.08 per ounce. The US dollar weakened slightly against a basket of Group-of-20 currency peers, and Treasury yields edged higher.
Oil prices gained. West Texas Intermediate crude rose as much as 1.1%, to $52.92 per barrel. Brent crude, oil's international benchmark, fell 1.1%, to $56.15 per barrel.
Now read more markets coverage from Markets Insider and Business Insider:
US GDP grew by a weaker-than-expected 4% in the 4th quarter as COVID-19 cases soared
How Reddit day traders are using the platform to upend the stock market and make money in the process
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