Stocks claw back some; GameStop swings wildly

Stocks closed broadly higher on Wall Street Thursday, helping the market recoup some of its losses a day after its biggest pullback in nearly three months.

Investors continued to watch the wild swings in GameStop, AMC and severalotherstocksthathavebecome targets for hordes of online investors who have sent them skyrocketing in recent days, taking on big hedge funds who have bet they will fall.

Several of those stocks fell sharply after Robinhood and other trading platforms restricted trading in them, causing an outcry among customers. The chaotic trading action is drawing calls in Washington and elsewhere for regulatory action to curb the speculative frenzy.

The S&P 500 rose 36.61 points, or 1%, to 3,787.38, lifting the benchmark index out of the red for the year. It had lost 2.6% a day earlier, its biggest drop since October.

The Dow Jones industrial average gained 300.19 points, or 1%, to 30,603.36. The Nasdaq composite added 66.56 points, or 0.5%, to 13,337.16. The Russell 2000 index of smaller companies slipped 2.09 points, or 0.1%, to 2,106.61.

Mike Zigmont, director of trading and research at Harvest Volatility Management, said the cascade on Wednesday likely began when larger institutions started taking steps to reduce their exposure to risk at the same time, partly because of the sharp and questionable gains in several stocks. That prompted others in the market to follow suit, accelerating the decline. Similar sentiment may have driven shares higher Thursday.

“You listen to your models, and suddenly everybody is de-risking together. And everything cascades.” he said. “Then you sleep on it, and things don’t look so bad.”

GameStop skidded 44.3% to close at $193.60, after swinging in a gigantic range between $112 and $483. At the beginning of the year it was trading under $18 a share.

Meanwhile, AMC Entertainment fell 56.6%, after rising nearly 600% this month.

Investors also continued to focus on company earnings. More than 100 companies in the S&P 500 are scheduled to tell investors this week how they fared during the past three months of 2020.

Apple fell 3.5% after the iPhone maker posted a record quarterly profit, helped by big sales of iPhones and Apple Watches during the holiday season. Investors focused on the fact that Apple was conservative in its full-year outlook for 2021, in which the company cited economic uncertainty and the pandemic as part of the reason for the forecast.

Meanwhile. hopes are high for President Joe Biden’s proposed a $1.9 trillion COVID-relief package, but worries are growing the plan might also be scaled back.