Friday saw stocks fall as investors deal with increased volatility caused by speculative bets made by day traders, as well as disappointing data concerning the Johnson & Johnson coronavirus vaccine. The DOW opened at 9:30 a.m. 206.26 points down, as reported by Business Insider.
Johnson & Johnson saw one of the largest drops in valuation on Friday after the announcement that its vaccine was 66 percent effective against the coronavirus, following a global study. The effectiveness rate is well below that of Pfizer and Moderna -- the two drugmakers whose vaccines have been approved and shown results in studies of 95 percent effectiveness -- and it appears to be less effective against a more contagious variant of the virus first discovered in South Africa.
Johnson & Johnson helped push stocks to record highs in January as hopes rose over an expedited rollout of the vaccines that could speed up the economic recovery. With the underwhelming results, markets appear to be adjusting to the presumption that it may take longer before the pandemic comes to an end.
While investors have been able to plan for Johnson & Johnson's report, the markets have faced a much more unexpected concern this week. Day traders have heavily backed companies such as GameStop and AMC, which have been the target of short sales by hedge funds. Platforms such as Robinhood and Interactive Brokers restricted trading on the companies on Thursday, drawing condemnation and raising calls for congressional hearings and reform.
A diverse range of figures -- including Rep. Alexandra Ocasio-Cortez, Donald Trump Jr., Barstool Sports founder Dave Portnoy and rapper Ja Rule -- voiced their displeasure with the actions of the financial service companies.
"Gotta admit it's really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino," Ocasio-Cortez tweeted.
The restrictions were pulled back on Friday, with retail traders returning to buy into the risky investments.
This method by traders of targeting shorts has raised concerns among wealthier investors over the future of some hedge funds, who will likely have to sell long positions in order to cover the losses from their bets. Despite it only impacting a few hedge funds so far, the disruptive strategy may become a growing trend.
Meanwhile, Bitcoin saw its value surge beyond $38,500 after business magnate Elon Musk added "#bitcoin" to his Twitter bio. This is the first time since January 15 that its value has reached that point, with its price floating around $32,000 over the last week.