Wall Street Braces as Trading Resumes

February 5, 2021 James Heinsman Hedge Fund News

Investors, brokers, fund managers and other finance professionals braced Monday for trading to resume on Wall Street after one of the most tumultuous weeks in the market’s history.

The CBOE Volatility Index (VIX), often referred to as Wall Street’s “fear index,” spiked 45.45 percent in January, closing the month at $33.09 after a week in which the overall market suffered its worst setback since before the US presidential election: According to MarketWatch,  The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite were clipped by 3.3% to 3.5% for the week, leaving them down 1.1% to 2% for the month.

For hedge funds, of course, all eyes will be on GameStop (NYSE: GME), which experienced four-digit gains followed quickly by sharp declines last week. The company has been struggling for years – it remains a brick-and-mortar retailer in a gaming universe that is rapidly moving towards a digital existence. Over the past year, Game Stop’s struggles have worsened since coronavirus kept people away from shopping malls, where many Game Stop branches are located.

That’s the reason several funds set out to short the stock in the first place.

Industry pundits say last week’s roller coaster was a phenomenon “like nothing they’d ever seen,” with some positing the notion that the turmoil could have been hatched by a small group of amateur investors out to hurt large-scale hedge funds.

“They seem hell-bent on taking on Wall Street, they seem to hate hedge funds and threads are peppered with insults about ‘boomer’ money. It’s a generational fight, redistributive and all about robbing the rich to give to the millennial ‘poor’,” analyst Neil Wilson told the BBC.

Hedge Funds,

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