Dow soars 300 points as day-trader restrictions soothe market nerves
- US stocks gained on Thursday as several brokerage firms placed trading restrictions on a handful of volatile stocks popular with Reddit traders.
- Weekly jobless claims fell to a three-week low, suggesting a recovery in the labor market is underway.
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US stocks moved higher on Thursday as several brokerage firms placed trading restrictions on a handful of volatile stocks popular with Reddit traders.
Robinhood, Interactive Brokers, and Webull restricted its users from buying volatile stocks that have been in a short squeeze fueled by traders on Reddit's Wall Street Bets forum.
The move triggered a massive decline in names like GameStop, BlackBerry, and AMC Entertainment.
Additionally, weekly jobless claims fell to a three-week low, hitting 847,000. That is better than analysts' expectations of 875,000 jobless claims and represented a 7% decline from last week's figure.
Continuing claims, which track Americans receiving unemployment-insurance payments, dropped to 4.8 million for the week that ended January 16. Economists expected continuing claims to total 5.1 million.
Here's where US indexes stood after the 9:30 a.m. ET open on Thursday:
- S&P 500: 3,787.33, up 0.97%
- Dow Jones Industrial Average: 30,603.92, up 0.99% (300.75 points)
- Nasdaq composite: 13,337.16, up 0.5%
The epic short squeeze in GameStop briefly continued in early Thursday trades, with shares soaring as much as 40% to almost $500 in the premarket session. But Robinhood's decision to limit trading in the stock deflated Thursday's rally, with the stock ultimately falling more than 30%.
American Airlines benefited from Reddit traders pitching the stock as a short-squeeze candidate. The stock soared as much as 31% after the company reported better-than-expected fourth-quarter earnings.
Apple's fourth-quarter earnings report beat analyst expectations by a mile, but the stock still traded lower by about 1%. Tesla fell 4% on Thursday after the company's fourth-quarter earnings report failed to meet analyst expectations.
Oil prices fell. West Texas Intermediate crude dropped as much as 1.02% to $52.31 per barrel. Brent crude, oil's international benchmark, fell 0.52% to $55.52 per barrel.
Gold dropped 0.16% to $1,841.80 per ounce.