The S&P 500 notched its biggest daily gain in 12 weeks on Monday after suffering from last week’s 3% decline, which was its worst since October.
Last week’s volatility was driven by a number of short-squeezes in stocks that had been targeted by traders coordinating on Reddit’s WallStreetBets forum, but JPMorgan said investors should take advantage of the decline and “buy the dip.”
The short-squeeze conditions from last week didn’t carry over into this week, with shares of GameStop falling more than 35%.
Here’s where US indexes stood after the 4:00 p.m. ET close on Monday:
The epic surge in GameStop and AMC Entertainment led to hedge funds dumping their stock exposure at the fastest rate since 2009, according to a note from Goldman Sachs, which likely contributed to last week’s decline in stocks.
The Reddit trading phenomenon doesn’t seem to be over just yet. Silver spiked more than 10% on Monday after the commodity made the rounds on social media as a potential short-squeeze play that could hurt big banks, but not all were convinced as many argued that it could dent the current strength in shares of GameStop.
And famed investor Michael Burry of ‘The Big Short’ has advice to investors who benefitted from the epic rally in GameStop: sell.
“Hey, $GME is now a $stonk and may go >$1000, but if I made a life-altering amount in this stock, I’d punch out,” Burry tweeted.
Restrictions are still in place for certain stocks on the popular Robinhood brokerage platform. Eight stocks remain on Robinhood’s restricted buy list, including GameStop, which investors can only buy one share of.
Robinhood raised an additional $2.4 billion on Monday as the app faced continued scrutiny from its user base. The company raised $1 billion from investors last week.
Virin Galactic surged more than 20% after it rescheduled its test flight window for mid-February. Its first test flight was aborted due to a connectivity issue with the onboard computer.
Gold rose 0.71%, to $1,860.50 per ounce.