What Did the Stock Market Do? Jan. 28, 2021

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Major Indices Close Out Thursday in the Green

[Thursday, January 28, 4:03 pm]
Contributed by Sarah Smith

  • The S&P 500 closed higher by 0.97%
  • The Dow Jones Industrial Average closed higher by 0.99%
  • The Nasdaq Composite closed higher by 0.5%
  • The Russell 2000 closed higher by 0.15%

Mr. IPO Sounds the Alarm on 2021 SPAC Stocks

[Thursday, January 28, 3:19 pm]
Contributed by Sarah Smith

University of Florida economist Jay Ritter is better known as Mr. IPO for his research on initial public offerings. Now, Mr. IPO thinks he knows a thing or two about what is coming in the market for special purpose acquisition companies. According to Ritter, the latest batch of blank-check companies is largely going to struggle. Why? As Ritter sees it, SPAC stocks have come too far into the mainstream, eliminating the potential for low-risk or no-risk gains.

What exactly does this mean? Ritter singles out Climate Change Crisis Real Impact I Acquisition (NYSE:CLII), which recently announced it would bring EVgo public. CLII stock nearly doubled on the day of the merger announcement. This sort of pop he says is the dream for SPAC investors. However, with the market heating up, pressure will be on. It will be harder for SPACs to wow investors with their target companies, putting the targets in a more favorable position.

In other words, not every blank-check company is going to take an EVgo or a Lucid Motors public. Blank-check companies that fail to deliver red-hot targets may be unfairly punished, as Ritter speculates.

Whether or not Mr. IPO is right remains to be seen. For now at least… the SPAC market continues to heat up. Read the latest SPAC merger news from InvestorPlace.com here.


Elon Musk Sends CD Projekt Stock Soaring

[Thursday, January 28, 2:40 pm]
Contributed by Sarah Smith

Tesla (NASDAQ:TSLA) CEO Elon Musk continues to shift and shape the stock market in odd ways. Today, it looks like the social media star is behind a rally in CD Projekt (OTCMKTS:OTGLY). For those unfamiliar, CD Projekt is the Polish video game developer behind controversial Cyberpunk 2077.

One of the most anticipated games of 2020, Cyberpunk 2077 launched to great criticism. Actual gameplay did not meet expectations, and users reported glitches left and right. In fact, the criticism was so high that Sony (NYSE:SNE) chose to pull the game from its PlayStation store and offer full refunds to all customers. CD Projekt has continued to work on the game, releasing its latest updates today to fix more bugs.

Musk and girlfriend Grimes are both supporters of Cyberpunk 2077. Grimes, a popular singer and the voice of Cyberpunk character Lizzy Wizzy, used her social media today to highlight the game. Musk tweeted a photo of the Plaid Model S, following it up with a note that “it can play Cyberpunk.” He also said that he liked the aesthetics of the game.

OTGLY stock is up 11% in response.


Midday Update: Dow Adds 500+ Points

[Thursday, January 28, 1:39 pm]
Contributed by Sarah Smith

  • The S&P 500 is up 2.11%
  • The Dow Jones Industrial Average is up 1.94%
  • The Nasdaq Composite is up 1.72%
  • The Russell 2000 is down 0.24%

What Comes Next for Robinhood?

[Thursday, January 28, 1:36 pm]
Contributed by Sarah Smith

Has anyone started writing a book yet about what is happening in the market?

Last night, the moderators of r/WallStreetBets briefly made the subreddit private as regulatory concerns swirled. Retail investors were beating hedge funds, and a lot of money was and is at stake. Redditors came back swinging this morning, only to find that Robinhood was placing trading restrictions on high-flying names like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC). According to the trading platform, these restrictions would help protect customers in a time of high market volatility. As a result, users can only close out their existing positions on GME, AMC and six other Reddit stocks.

Unsurprisingly, r/WallStreetBets and all sorts of celebrities were displeased with the news. Dave Portnoy of Barstool Sports is calling for prison time. Both New York Rep. Alexandria Ocasio-Cortez and Texas Sen. Ted Cruz are calling for an investigation into Robinhood. Ja Rule is joining in on social media movements like “hold the line” to encourage investors to keep holding their GME and AMC shares.

Where does this all go? The latest news includes a class-action lawsuit against Robinhood. For more, you can read the InvestorPlace.com brief here.


Silver Stocks Get a Big Reddit Boost

[Thursday, January 28, 10:25 am]
Contributed by Sarah Smith

The newest target from r/WallStreetBets appears to be… silver stocks? According to one poster, silver is currently undervalued. If the group of investors uses their funds, they could boost prices to match material levels and see a handsome profit.

Right off the bat, this is different than some of the other Reddit stories driving the market today. GameStop (NYSE:GME), Build-A-Bear Workshop (NYSE:BBW) and AMC Entertainment (NYSE:AMC) are struggling companies looking to overcome Covid-19 and outdated business models. As the poster outlines with silver stocks, a more apparent fundamental catalyst is at play.

However, these differences in arguments are not stopping the rally. InvestorPlace contributor William White rounded up some of the large movers and the latest silver stock news. For more, read the brief on silver stocks here.


3 Big Stories to Watch Today

[Thursday, January 28, 10:19 am]
Contributed by Sarah Smith

  1. Reddit, Reddit, Reddit. Has your mom called to ask you to explain r/WallStreetBets yet? Mainstream attention to the subreddit is booming, bringing with it criticism and a host of concerns from the old-school players on Wall Street. GameStop (NYSE:GME) may have pulled off its $500 pre-market highs, but its rally is still astronomical. As a result, regulators are calling for the New York Stock Exchange to halt its trading for 30 days. Brokerages are placing trading restrictions on GME and its peers. Discord booted r/WallStreetBets, mods briefly made the subreddit private and the Financial Times speculated early this morning that the subreddit is aligned with alt-right politics. But Redditors continue to persevere, bringing the subreddit back to the public eye as a rally continues. The Financial Times has also removed the alt-right comparisons. Who knows where the news cycle will go today, but no matter what, Reddit should be on your mind.
  2. Unemployment. Investors learned today that 847,000 Americans filed for initial unemployment benefits last week, slightly lower than estimates for 875,000 claims. This report is also down from an elevated 914,000 last week. While overall it is a good sign that these weekly reports may be gradually trimming down, a broader look at the economy today raises concerns. We also learned that the U.S. economy grew at a 4% annualized pace in the fourth quarter. That means the economy shrank by 3.5% in 2020, making it the worst year for the economy since 1946.
  3. Earnings? While the finance world flirts with a handful of speculative stocks, big names in business reported earnings last night. Apple (NASDAQ:AAPL) delivered its best quarter for revenue ever, Facebook (NASDAQ:FB) beat earnings estimates and Tesla (NASDAQ:TSLA) reported an earnings miss that had some analysts changing their tune. Working in favor of Tesla is the new Model S, which the automaker is flaunting today.

Major Indices Reverse Course, Open Higher

[Thursday, January 28, 9:33 am]
Contributed by Sarah Smith

  • The S&P 500 opened higher by 0.61%
  • The Dow Jones Industrial Average opened higher by 0.72%
  • The Nasdaq Composite opened higher by 0.39%
  • The Russell 2000 opened lower by 1.91%

Stock Market Futures Point to a Lower Open

[Thursday, January 28, 8:35 am]
Contributed by Sarah Smith

  • S&P 500 futures are down 0.25%
  • Dow Jones Industrial Average futures are down 0.01%
  • Nasdaq Composite futures are down 0.87%
  • Russell 2000 futures are up 0.35%

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