By Geoffrey Smith
Fintech Zoom — The battle between retail traders and Wall Street hedge funds swung back in favor of the latter at the opening of trade on Wednesday, as various online brokerages made it harder to buy the heavily-shorted stocks that have been squeezed hardest in recent sessions.
Interactive Brokers (NASDAQ:) said it would raise its margin requirements to 100% of long exposures and 300% for short exposures until further notice. It also put options trading in AMC Entertainment (NYSE:), BlackBerry (NYSE:), Express (NYSE:), GameStop (NYSE🙂 and Koss Corporation (NASDAQ:) into liquidation, citing “the extraordinary volatility in the markets.”
Meanwhile, Robinhood – the brokerage where much of the gung-ho attack on short-sellers has been concentrated, said it will stop its clients buying all of the above stocks, as well as Naked Brand Group (NASDAQ:) and Nokia (NYSE:).
Such moves eased the pressure on hedge funds to liquidate other positions to cover their shorts. By 9:35 AM ET (1435 GMT), the was up 253 points, or 0.8% at 30,557 points. The was up 0.8% and the was up 0.6%.
GameStop (NYSE🙂 stock was again the most active stock in early trading, despite the limitations. It rose as much as 35% before retracing to be up a mere 23%. It’s still up nine-fold from its levels of a week ago, and Thursday’s spike briefly made it the biggest stock in the Russell 2000 (NYSE🙂 midcaps index. Other names still being squeezed included American Airlines (NASDAQ:) stock, which rose 14% after it reported it swung to a loss of $2.18 billion in the fourth quarter and said it was still burning $30 million a day.
Elsewhere, Tesla (NASDAQ:) stock slipped 5.4% after it reported its first-ever full year of profit, with some disappointed by the forecast for this year’s growth in deliveries. Apple (NASDAQ:) stock also fell amid some disappointment with its outlook for the coming year, but pared overnight losses to be down only 1.3%.
There was little evident reaction to the – widely expected – news that the in the fourth quarter, expanding at an annualized rate of only 4%, from a rate of over 33% in the previous three months. The pandemic-driven clampdown on services activity in particular in recent months was also visible in the latest numbers, which stayed high at 847,000 – although that was clearly down from the previous week’s 914,000.
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