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The meme stock rally continues the Trump trade rebound that has stocks trading at record highs
The meme stock rally continues the Trump trade rebound that has stocks trading at record highs

Yahoo

time23-07-2025

  • Business
  • Yahoo

The meme stock rally continues the Trump trade rebound that has stocks trading at record highs

Meme stocks are running wild again. Some of the latest highfliers — Krispy Kreme (DNUT), Opendoor (OPEN), and Kohl's (KSS) — all have one key thing in common: They are heavily shorted stocks. This means investors have been betting the next price move for these names will be lower, and some strategists suggest that this week's meme surge is merely the latest pillar of a consistent theme during the S&P 500's 25% rally over the last three months. "A lot of what has outperformed significantly [since the market bottom], obviously the memes, but the heavily shorted stocks of every variety," Charles Schwab chief investment strategist Liz Ann Sonders told Yahoo Finance on Wednesday. "So I think there may be that also added attempt on the part of the retail trader to press those shorts and force a repositioning on the part of speculators and institutions." Short sellers have lost just shy of $355 billion since the market bottom on April 8, according to data from S3 Partners. That includes more than $100 billion in losses since Yahoo Finance last published S3's data on May 22. Since President Trump first reversed his starkest tariff stance on April 9, betting against the roaring stock market rally has been a losing strategy. And the market's V-shape recovery has been more than a simple "Trump Always Chickens Out" (TACO) trade. Between April 8 and May 20, short sellers lost more than $35 billion betting against the "Magnificent Seven" tech cohort, which has once again been a key driver of the market's chug higher. "The market was caught short at a time when there was no actual fundamental information available," BNP Paribas head of debt and equity strategy Viktor Hjort told Yahoo Finance. As Trend Labs founder JC Parets wrote in a research note on Wednesday, the stock market's rise is largely about investor "mispositioning." Parets cited a Wall Street Journal poll of economists from April 12, which showed nearly half expected a recession in the next 12 months. "These economists had everyone convinced a recession was coming," Parets wrote. So far, that downturn has not come to pass, but investors continue to be caught short as the fundamental story for stocks and the economy has proven to be largely better than feared. This has driven a risk-on rally that's featured a race to find where trades are most out of place. After falling almost 30% to start the year, Cathie Wood's Ark Innovation ETF (ARKK) is up nearly 90% from the April bottom. Wood's flagship fund's top 10 holdings include names like Tesla (TSLA), Coinbase (COIN), Robinhood (HOOD), and Palantir (PLTR). Short sellers in each of those stocks have lost at least $2 billion or more since the April market low, according to S3 Partners data. Bespoke Investment Group highlighted this trend in a research report on Tuesday night detailing "reminiscences of 2021," when the meme stock frenzy first took center stage. Bespoke found that the 100 most shorted stocks in the Russell 1000 index (^RUI) have outperformed the index itself by over 30 percentage points in the past three months. The index of the 100 most shorted stocks is up over 52% in that time period. "Expect continued short side losses as the economy grows, despite increased tariffs, and interest rates finally decline later this year," S3 Partners managing director Ihor Dusaniwsky told Yahoo Finance. "We usually hear caveat emptor — "let the buyer beware." But in this market, caveat venditor — "let the seller beware" — is much more appropriate." Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Stock Market Today: Stocks Looking Lower following Debt Downgrade
Stock Market Today: Stocks Looking Lower following Debt Downgrade

Miami Herald

time19-05-2025

  • Business
  • Miami Herald

Stock Market Today: Stocks Looking Lower following Debt Downgrade

Good Morning! Stocks are looking lower today. S&P futures are off 61Nasdaq futures off 302 Treasury bonds are looking lower, too, on the heels of being downgraded by Moody's on Friday. What's looking up? Gold and the VIX. Over on TheStreet Pro, James "Rev Shark" DePorre discusses the debt downgrade in Will a Surprise Downgrade of the U.S. Credit Rating Derail the Stock Market Rally? He notes that bond prices began to sell off immediately and bond yields, which move inversely to price, for the 30-US Treasury moved over 5% for the first time since November 2023. Scott Bessent dismisses the downgrade, but many strategists believe it will hasten the rotation out of US assets. As a result, the Dollar Index is down 0.835 to 100.268. Why did Moody's downgrade US debt? Failure to control federal deficits and a pending tax bill that could make things worse. Related: A critical industry is slamming the economy US debt was last downgraded in 2011 and Helene Meisler thought it would be helpful to look at that period to see if it could provide a roadmap for what we might expect in the coming weeks. In What Does the US Debt Downgrade Mean for Stocks? Let's Take a Trip Back to 2011, she looks at stock and bond prices both before and after the debt downgrade and determines that 2011 will not likely be a helpful roadmap. Despite what many are saying, the market today is just to different from what it was doing 14 years ago. Here on TheStreet, Charley Blaine covered Walmart in Tariffs, surprise downgrade will weigh on market, and finds that Walmart is warning of price increases because of the tariffs. Charley says that Walmart sources much of its non-grocery merchandise from China, and those products still may be subject to 30% tariffs. Although Trump wants the retailer to eat the tariffs and not pass them along to consumers, Charley notes that the tariff bill could easily be larger than Walmart's operating profit. If that's the case, they will have no choice but to pass the added expenses on to consumers. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.

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