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Wall Street Girds For Another Week Of Volatility

Wall Street is readying itself for yet another week of chaos on the markets involving the pumping-up of stocks like GameStop and AMC, Reuters writes, with it now likely to spread to other stocks.

The chaos resulted in a severe drubbing for some of the larger Wall Street hedge funds, including Melvin Capital, which took a hit of 53 percent after retail investors drove up stocks that it had bet against.

Melvin Capital did receive an infusion of fresh cash from investors in the final days of January. Reuters says Melvin ended the month with over $8 billion in assets, despite starting the year with around $12.5 billion.

Citron Research’s Andrew Left, who has built a brand as one of the world’s top short-sellers, has turned his back on detailing publicly the shortcomings of various companies. There has been a vicious backlash against him and others who had said GameStop’s stock wasn’t worth the price.

With the price fluctuations of the recent times, there has been more position covering by U.S. hedge funds, with both buying and selling at their highest rates since the financial crisis from 2008. Despite that, market exposure to stocks is still at close to record highs, a study by Goldman Sachs warned.

And, there are signs that the retail investors who piled on GameStop and AMC are now setting their sights on other things even beyond just stocks, Reuters writes.

Thursday and Friday saw the price of silver gaining 10 percent since messages started to go around on social media about buying into that market and driving the prices up, Reuters writes, with gold seeing similar increases.

PYMNTS reports that various regulators and brokers had taken steps to try and curb the volatility, including Robinhood’s and TD Ameritrade, both of which restricted trading on some stocks. In response, users of the Reddit chatroom WallStreetBets have made accusations that the companies are protecting big-money hedge funds while disadvantaging smaller users.

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