The feds are keeping an eye on GameStop’s exploding stock price, White House press secretary Jen Psaki said Wednesday.
Treasury Secretary Janet Yellen and other economic officials in the Biden administration are “monitoring the situation” with GameStop and other stocks that have been pumped up by rookie investors online, Psaki told reporters at a press briefing.
“It’s a good reminder, though, that the stock market isn’t the only measure of the health of our economy,” Psaki said. “It doesn’t reflect how working- and middle-class families are doing.”
Psaki made the remark in response to a question and didn’t say what concerns officials might have about the stock rally. But Barron’s reported late Tuesday that securities regulator in Massachusetts are concerned that GameStop’s unusual trading suggests there is something “systemically wrong” with the options trading around the stock.
GameStop’s share price more than doubled Wednesday and has surged more than eightfold over the past week thanks largely to what appear to be small-time traders on Reddit’s “r/wallstreetbets” forum.
Users on the message board, who refer to themselves as “degenerates,” have been trying to put a squeeze on institutional investors who bet against the video-game retailer, sending the stock price soaring in the process.
Novice traders have also been plowing into other companies whose shares were worth only a few bucks just last week, such as movie theater chain AMC Entertainment, smartphone maker Blackberry and headphone maker Koss Corporation.
Those stocks exploded even as the broader market took a tumble Wednesday. The Dow Jones industrial average was down about 1.4 percent, or 427.42 points, at 30,509.62 as of 2:05 p.m. while the S&P 500 was recently off about 1.7 percent.