NEW YORK — Stocks sank again as a speculative frenzy over GameStop and a handful of other stocks ramps up worries over how much damage an online revolt against Wall Street bigwigs can do to the broader market.
The S&P 500 fell 1.9% Friday, giving the index its biggest weekly loss since October.
However, GameStop soared nearly 70% in one day, clawing back most of its steep loss from the day before, after Robinhood said it will allow customers to start buying some of the stock again Friday morning. GameStop's stock closed this week at $325, it has gained 400% just in a week and more than 1,700% since January 1.
Robinhood and other sites catering to amateur-traders limited stock buying Thursday citing the volatility of the market on certain stocks, including GameStop, BlackBerry, Bed Bath & Beyond, retail store Express, electronics manufacturer Koss, retailer Naked Brands and Nokia.
GameStop has been on a stupefying run this month and become the battleground where swarms of smaller investors see themselves making an epic stand against the financial elite. Noticing a large amount of investors were betting against GameStop, counting on the gaming store's stock to fall also called a "short", smaller investors pushed the stock up.
As a result, GameStop's stock soared from about $18 a share to nearly $400 a share in a matter of weeks. According to Reuters, the Wall Street professionals that attempted to short GameStop's stock have lost an estimated $7 billion in a matter of days.
In a blog post Thursday afternoon, and follow-up tweets from co-founder Vlad Tenev, Robinhood explained the move to limit trading.
"As a brokerage firm, Robinhood has many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment," Tenev tweeted.
"These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today."
Calls for regulators to step in, meanwhile, grew louder.
The New York Attorney General Letitia James said in a statement her office was reviewing trading on the Robinhood app relating to GameStop.
“We are aware of concerns raised regarding activity on the Robinhood app, including trading related to the GameStop stock,” James said. “We are reviewing this matter.”
Lawmakers from both sides of the aisle have called for investigations into Robinhood and the traders participating in the GameStop situation.