Monday morning briefing: GameStop starts a controversy

The U.S. Bureau of Economic Analysis announced U.S. gross domestic product expanded 4.0%, annualized, over the fourth quarter of 2020. This was the second consecutive quarterly expansion after falling in the second quarter. But the news was not all good. Growth in consumer spending slowed in the fourth quarter, which was concerning for economists who were expecting consumer spending to be a key driver of the recovery.

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Chart of the week: GameStop starts a controversy

It was a wild ride for many retail stocks last week, particularly GameStop Corp., which was at the centre of a battle between retail day traders and institutional short-sellers.

A Reddit chat room for day traders initiated interest in GameStop, and these day traders began taking long positions in the company. A subsequent rally pushed the market capitalization of GameStop to the top half of all companies listed on the S&P 500 Index. The rally also forced many short sellers to exit their positions with substantial losses. Trading platforms, like Robinhood and others, temporarily halted trading in GameStop, which raised the ire of some U.S. government officials. Let us know what you think.
Used with permission of Bloomberg Finance L.P.