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Markets

Tech Giants Lift S&P 500 to Record as Reddit Favorites Languish

  • Most major industries advance; Nasdaq 100 highest since April
  • AMC, GameStop being down are ‘really a sideshow’: Purves

For all the hubbub around meme stocks in recent weeks, it was on a day that the day-trader favorites plunged that the S&P 500 Index climbed to its first record close since early May.

Tech shares climbed 0.8%, led by stalwarts Amazon.com Inc., propelling the benchmark for American equities to an all-time high of 4,239.18 GameStop Corp. plunged 27% and AMC Entertainment Holdings Inc. sank 13%, dragging a Goldman Sachs Group Inc. basket of meme stocks to a 6% loss on Thursday.

For months, the broad market was stuck in a limited range as day traders flocked to shares with elevated short interests to profit from short-squeezed rallies. That split performance reversed Thursday as investors brushed aside stronger-than-expected inflation data and bet that the Federal Reserve will maintain its ultra-accommodative policies. Meanwhile, GameStop led the retreat in retail favorites after the company said it planned to sell more shares and offered few details about its turnaround strategy.

S&P 500 breaks out of two-month range to hit record while meme darlings fall

“The market is higher today because huge parts of the market like big tech are getting some reprieve from lower rates while more economically sensitive equities are still getting support,” Tallbacken Capital Advisors’ Michael Purves said. “It’s largely a win-win day for the broader market, and if AMC and GME are down a lot, it is really a sideshow.”

Seven of the S&P 500’s 11 major industries advanced, driving the benchmark above the previous record notched in early May. The tech-heavy Nasdaq 100 jumped 1.1% to the highest level since April.

By contrast, day-traders darlings fell back to Earth. GameStop, one of the first meme-stock icons, dropped the most since March, cutting its 2021 advance to 1,070%. AMC, another headliner of this year’s retail mania, fell more than 10% for a second day, trimming its year-to-date gain to 1,919%. Workhorse Group Inc., an electronic-vehicle maker that almost doubled in the past month, fell 11%.

“Tech megacaps fell out of love because of a rotation to reopening names, and that could be starting to reverse,” said Michael Antonelli, managing director and market strategist at Robert W Baird & Co. “These megacaps are so big and liquid, they’re not in the same category as AMC and GameStop, meaning we probably have big institutional names behind today’s jump.”

— With assistance by Elena Popina