'Meme' Stocks Suffer as Wall Street Opens Lower
U.S. equities opened sharply lower on Thursday despite data confirming the economic rebound, as investors await the key government jobs report for May.
Even "meme" stocks like AMC Entertainment retreated from their stunning gains in recent days, after the company announced plans to sell 11.5 million shares but warned retail investors to be prepared to take losses amid inflated share prices.
About 30 minutes after the opening bell, the Dow Jones Industrial Average had fallen 0.5 percent at 34,437.87.
The broad-based S&P 500 lost 0.7 percent to 4,179.67, while the tech-rich Nasdaq Composite Index fell 1.1 percent to 13,603.83.
"There is a risk-off tone permeating the equity futures market due in part, it seems, to the crazy risk-on tone that has been permeating the meme stocks," said Briefing.com analyst Patrick J. O'Hare.
"Some of the defensive tone this morning could also be related to some frustration that the S&P 500 has been unable to breakout to a new high."
The declines followed release of data from payroll services firm ADP showing private hiring surged in May, adding 978,000 jobs, a good sign for the Labor Department's official employment report due out Friday even though the figures are frequently out of sync.
New claims for jobless benefits also continued to decline, falling last week to below 400,000 for the first time since the pandemic struck, according to government data.
Movie theater chain AMC, the darling of retail investors, fell 26 percent after nearly doubling in value in the prior session.
The company filed paperwork saying it was planning to sell shares but also issued a warning that buyers could "incur substantial losses."
Noting the recent volatility and prices were "unrelated to our underlying business, or macro or industry fundamentals," AMC said, "we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment."
Meanwhile, United Airlines fell 2.2 percent after announcing plans to buy supersonic jets.
Source: Agence France Presse
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