GameStop losses piled up Tuesday, with shares tumbling 60 percent while the broader market got another bounce from another batch of promising corporate earnings and ongoing stimulus talks.

U.S. stocks built on Monday’s momentum, clawing back some losses from a chaotic January marked by a burst of speculative trading fueled by the Reddit forum WallStreetBets and other online trading communities.

The Dow Jones industrial average closed up Tuesday nearly 476 points, or nearly 1.6 percent, to 30,687.81. The S&P 500 climbed 52 points, or nearly 1.4 percent, to 3,826.27, while the tech-heavy Nasdaq added 209 points, or nearly 1.6 percent, to settle at 13,612.78. Last week, broad anxiety over the consequences of the market chaos and worrying economic data fueled widespread losses. But optimistic investors eyeing resilient corporate earnings and discussions in Washington over another covid-19 rescue package are driving a comeback.

“The broader market, where there was this shaking in the boots about systemic risks of this last week, clearly this week it’s kind of shaking that off,” said Michael Mussio, president of FBB Capital Partners. He pointed to investors’ hopeful attitudes about vaccine distribution and corporate earnings from Amazon, Google and Chipotle, companies he called “growth drivers of the economy.”

The GameStop rally that shook the institutional powers of Wall Street, provoking fresh scrutiny of the financial services industry and a new ecosystem of social media-powered retail stock trading, is losing steam, with the video game retailer’s stock losing more than half its value in two days.

As the broader market swelled in anticipation of robust earnings reports from tech giants Amazon and Alphabet, GameStop shares moved in the opposite direction, falling almost 60 percent, to $90.21. The losses piled on to the retailer’s 30 percent nosedive on Monday, and analysts say it signals a cooling off of the rally – while Reddit investors argue it’s a sell-off panic created by brokerage firms placing restrictions on buying shares.


Other assets and securities that had attracted intense investor interest in recent days, including AMC, BlackBerry and the precious metal silver, also lost ground Tuesday, sliding 41 percent, 21 percent and nearly 9 percent, respectively.

Silver also retreated, falling more than 9.6 percent after surging more than 7 percent Monday. Some investors appeared to adapt their GameStop playbook to the undervalued commodity, while others within the r/WallStreetBets community warned against the investment as a distraction that would benefit hedge fund managers.

Mussio expressed doubts last week that the rally propelling GameStop and AMC would be long term; now thinks it will run its course soon.

“There’s certainly a sentiment of buying GameStop is my way of sticking it to the man and that’s fine, but that’s maybe not the best investment strategy,” he said. “The sheer volume, the price action, would lead us to believe it’s not just individual investors but institutions moving around that money, as well.”

But many WallStreetBets investors are still determined to hold on to their GameStop shares and positions in other shorted companies that have largely tumbled since last week’s mind-blowing rally.

Jake Graham, 25, a mobile diesel technician in Lubbock, Texas, started investing to help pay off his student loans. When he first joined the subreddit in July, he was hesitant to follow the advice of investor members – but when the GameStop rally started in January, he realized what the online forum had predicted had some truth to it.


Graham now holds nearly 47 shares of GameStop and seven shares of AMC, which he said he plans to hold onto for as long as he can despite today’s declines.

“Back in 2008 when it crashed, you see videos of Wall Street just up in their buildings and laughing at people protesting. Billions of dollars were lost and they didn’t care. They were sipping their champagne and laughing,” he said, explaining why the risk is worth it to him to see how long retail investors can prevail. “I’m not that worried now.”

As of Tuesday afternoon, the popular trading platform Robinhood maintained a list of five restricted stocks: GameStop, AMC, Nokia, Naked and Express. The app limits customers who already own those brands in sufficient numbers from purchasing more and bars new customers from buying those stocks above a certain number of shares.

Robinhood has played a central role in the Wall Street drama as a key facilitator for an army of retail trailers and, conversely, for acting as a chokepoint in the middle of the speculative frenzy. Like other stock trading apps, Robinhood temporarily froze customers’ ability to buy GameStop and other highly sought-after shares, prompting a wave of selling and a vocal backlash from customers, lawmakers and business leaders.

The company has since announced it has taken in $3.4 billion in investments to secure its own financials. And the trading app, in a flurry of crisis management public relations, has stated in tweets and blog posts that it limited stock buying in volatile securities to ensure that it met rules on capital requirements.

On Tuesday, Robinhood issued a statement calling for financial regulators to allow for real-time settlement of U.S. equities, meaning the brokerage firm could settle investor trades immediately rather than two days later.

“Last week we saw the impact the two-day trade settlement period has on investors and ultimately the entire American financial system. Clearinghouse deposit requirements skyrocketed overnight. People were unable to buy some of the securities they wanted. Investors were angry and concerned, an unintended byproduct of the antiquated settlement process,” the company said in a blog post. “The existing two-day period to settle trades exposes investors and the industry to unnecessary risk and is ripe for change.”

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