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Reddit became synonymous with the meme stock rally in 2021. Now, its stock price has become a meme itself.
Reddit stock (RDDT) soared more than 12% on Tuesday and is up more than 30% since its initial public offering (IPO) last Thursday. Some reports suggest that the increase in options trading volume is linked to the recent sharp rise in stock prices.
The resurgence of the meme goes beyond one popular IPO. GameStop (GME), the original meme stock, posted its highest single-day gain in a year. A media SPAC tied to Donald Trump has finally debuted under the name Trump Media and Technology Group and the ticker symbol DJT. The stock rose more than 50% during Tuesday’s trading session alone.
“We’re in a very active market,” Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance. “We’re in a very momentum-driven market. One of the characteristics of momentum is that fundamentals become much less important. Only price movement matters more than valuation. Meme stocks are Typical.”
Beyond these popular stocks, signs of a risk-on market are flashing.
Bitcoin (BTC-USD) is nearing $71,000 per coin. MicroStrategy (MSTR), a stock that tracks Bitcoin price more closely than typical fundamental factors like earnings, is now up more than 200% year-to-date after Monday’s massive rally. .
Commodity trading is also strong, with gold (GC=F) rising 7% last month and hovering near all-time highs. Cocoa prices (CC=F) rose by nearly 50% during the same period.
For Liz Ann Saunders, chief investment strategist at Charles Schwab, such moves are a sign of a “froth” in the market.
“Everything seems to be in a bull market these days, except for bonds,” Saunders said. “It’s in cryptocurrencies, it’s in precious metals, it’s in certain other commodities, it’s also in some meme stocks. [all part] of mix. ”
The big move comes as the entire market is at an all-time high. The S&P 500 (^GSPC) has set new all-time highs 20 times in less than three months of trading this year, and is on pace to set a new all-time closing price record. The “upward-sloping” nature of the benchmark’s rise over the past few months (there hasn’t been a negative month since October 2023) makes us wonder if we’re in a stock market bubble that’s about to burst. Many people have had doubts. .
Many strategists argue that the answer is no.
Deutsche Bank’s equity strategy team reasoned in a research note on Monday that the $260 billion poured into equities since May last year does not represent a peak in risk appetite. Rather, it is supported by an improving outlook for both the economy and earnings.
Parag That, director of global asset allocation and U.S. equity strategy at Deutsche Bank, told Yahoo Finance that he has not yet seen an increase in flow data purely due to risk appetite.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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