Dow plunges 2%… Musk Short Sale Fights in Daejeon, US Game Stop Another 135%↑

The US New York Stock Market plunged on the 27th (local time) in the aftermath of sluggish performance of major companies and the’rebellion’ of individual investors.

The Dow Jones 30 Industrial Average of the New York Stock Market closed at 330,000.17, down 633.87 points (2.05%) from the battlefield. This is the largest drop since October last year.

The Standard & Poor’s (S&P) 500 index fell 98.85 points (2.57%) to 3750.77, while the technology-oriented NASDAQ index fell 355.47 points (2.61%) to 13,270.60.

On this day, the New York Stock Market fell sharply as a number of factors were mixed in the fatigue of the surge that continued from the end of last year.

The announcement that US aircraft manufacturer Boeing made a net loss of $1.94 billion (approximately 1.3 trillion won) last year, the largest ever last year, had a negative impact on investment sentiment. Boeing’s share price fell 4.1% on that day.

Even the semiconductor company AMD, which announced better-than-expected results from Wall Street, plunged 6.2%.

Some analysts say that an abnormal surge in some stocks due to the counterattack of individual investors, which has become a hot topic in recent years, has caused a negative effect on the overall stock market.

The background is that individual US investors gathered through the online community inflicted huge losses on hedge funds by intensively buying stocks such as GameStop and AMC Entertainment, a video game distribution chain that were targeted by large short sellers.

Hedge funds that sold these stocks short sold other stocks to compensate for the damage caused by the unexpected stock price surge, leading to a cascading downturn.

Gamestop stock price rose 135% on the same day, and the speculative buying trend of this stock was extreme as individual investors waged a war with the short selling forces. AMC Entertainment also surged 300%.

It is estimated that the influence of Elon Musk, who is famous for Tesla and SpaceX managers, was also influenced by the stock price surge that day.

On the 26th, Musk posted a post on his Twitter account called’Gamestonk’ and participated in the short sale of American ant investors.

Gamestonk is a combination of Gamestop, which is under attack by short selling forces, and’stonk’, which means fierce bombing. Musk also posted this article and a link to the US online stock community bulletin board. It is estimated that the surge in GameStop stock price on the 27th was also affected by Musk’s tweet.

The Federal Reserve System (Fed), the central bank of the United States, decided to freeze the standard interest rate at the current’zero interest rate’ level and maintain the asset purchase program, but it was not enough to prevent the bearish market.

Rather, the decline was even greater after Fed Chair Jerome Powell said at a press conference that the US economic outlook was “very uncertain.”

The Chicago Options Exchange (CBOE) Volatility Index (VIX), called Wall Street’s’Fear Index’, has crossed the 30th line, the highest since December last year.

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