Week of 05/13-05/17 Stock Market Indexes Reach New All-Time Highs

The S&P 500, Nasdaq, and DOW Jones Industrial Average surged earlier this week to new all-time highs and are set to close in weekly gains on Friday. This recent market rally came from a soft reading on consumer prices (CPI report) that fueled hopes that the Federal Reserve could cut interest rates sooner than expected.⁠ The consumer price index, the companion to the producer price index (PPI) that measures what consumers pay rather than what producers receive, showed a slight deceleration from March's annual gain in prices and month-over-month increase. Gamestop (GME) was one of the main highlights of the week, as the return of the "Roaring Kitty" to the X platform sent the stock soaring over 110% on Monday. "Roaring Kitty" also known as Keith Gill, is a prominent figure on the WallStreetBets subreddit and YouTube for his bullish stance on GameStop stock.⁠ GME's short squeeze was followed by similar related meme-stocks such as AMC, which surged over 80% the same day. The volatility continued throughout the week with both stocks getting halted numerous times, both up and down, until share prices receded due to announcements of both companies issuing shares. Other highlights of the week included Walmart (WMT) posting record earnings and Reddit (RDDT) announcing a partnership deal with OpenAI.

What are Meme Stocks?

Meme stocks refer to stocks that see a sudden surge in popularity and trading volume due to attention from Internet forums and social media platforms. Typically, meme stocks are companies that are not considered fundamentally strong but attract the interest of retail investors driven by online hype and speculation. This type of investing has become popular with the rise of social media platforms that facilitate the dissemination of information to a wide audience in real-time.

Meme stocks are characterized by high volatility, with sudden and sharp price movements in a short period. For example, stocks such as GameStop (GME), AMC Entertainment (AMC), and BlackBerry (BB) have seen a significant increase in trading volume and stock price due to increased attention from online influencers and retail investors.

Meme stock investing can be risky and speculative, as it often relies on hype and social media influence rather than fundamental analysis and traditional valuation metrics. Nevertheless, it has gained popularity among some investors who seek high-risk, high-reward trades.