The U.S stock benchmarks surged at the opening of today’s market trade as equities attempted to recover some lost ground from last week’s losses (the worst ever recorded since October) as a result of reduced pressure on hedge funds/large institutional investors to sell their long positions to cover their losses.
The DOW was up 0.8%, the S&P 500 index advanced 1% while the NASDAQ composite index gained 1.3%.
The unprecedented short rally in a handful of heavily sold stocks had triggered broad selling across the market as wall street guys were forced to raise liquidity last week. While the rally continues in some stocks at the open of the market, it appears to have eased in others, causing them to give up some of last week’s gains.
For Instance, AMC Entertainment stock was the biggest gainer of last week’s stars and it rose another 24%, while Nokia added another 7.2%. However, GameStop, the stock which started the whole revolution, fell 8.2% while Koss Corporation stock fell 31%. BlackBerry stock was down 5.2%.
This loss of momentum in some of last week’s hot stocks represents a dangerous moment for those who were late to the rally, given that many of these stocks are now trading far above what even their original advocates (the reddit guys) considered fair value.