EDITOR'S NOTE
Stocks rebounded from last week’s sell-off – which had been the worst since last October. Though the S&P 500 climbed by more than 1.6%, the Nasdaq Composite carried the day. The tech-heavy index rose over 2.5%, buoyed by Netflix and Amazon.
GameStop, a darling among retail investors on Reddit, tumbled by close to 30%. The decline appeared to ease investor concerns about a market mania. Indeed, the gaming retailer’s path is diverging from the S&P 500. 
Further, GameStop’s shares stumbled despite Robinhood’s decision to lighten some of the trading restrictions it imposed on so-called “meme stocks.”
By Monday afternoon, the brokerage firm began allowing investors to buy up to 20 shares of GameStop, up from the one share they could purchase on Friday.
The question on everyone’s mind seems to be whether retail investors’ speculative trading behavior could mean bad news for the broader stock market going forward.
The conditions aren’t quite right for that, writes Desh Peramunetilleke, global head of microstrategy at Jefferies.
“The presence of retail investors, rising levels of margin financing and liquidity suggests a growing bubble risk, especially for sectors heralded as the next growth engine but with unclear earnings visibility including EV, climate and biotech,” he wrote. “However, the two main triggers that could lead to a serious unwinding across equities are missing.”
Those triggers include an earnings collapse and potential monetary tightening, Peramunetilleke wrote. TOP NEWS
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