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Meme stocks fall in tandem with broad market selloff

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On Thursday, ‘meme stocks’ including Palantir, AMC and GameStop were lower in early trading as part of declines in the broader market. Julie Hyman, Brian Sozzi and Myles Udland discuss the price action in these stocks as well as other big movers.

Video Transcript

JULIE HYMAN: Definitely a risk off tone to the market this morning after records for stocks yesterday. Just take a look at the Dow futures inside the YFI Interactive as one example of what we're seeing. And this is the overnight session into this morning. And that slow decline lower and kind of bouncing along the lows here over the past couple of hours.

And as we have been talking about, really you can see this risk off pretty pervasive through the market here. It's even though there are some underlying themes, as Myles was just pointing out, that are affecting specific sub sectors of the market for specific reasons. China ADRs being the prime example.

We are definitely also seeing just kind of a broad based situation with the different averages, with the different asset classes. Looking at the 10 year yield right here and the low level where we are right now at 1.3% reflecting some of the sort of jitters that we're seeing in the market. Also wanted to look over at the heat map, if I could, to look at some of those subsectors beyond just what we're seeing with the China ADRs.

And this looks, actually, pardon me. We got to look at these premarket trades, because we still have a few moments to go. Meme stocks, which is something that Myles was alluding to just a few moments ago.

And here you have them. And a lot of red there, Jared. Jared, excuse me, I'm jumping the gun on Jared. Myles. AMC--

MYLES UDLAND: I'll take it.

JULIE HYMAN: --is down nearly 10% here. So, you know, this is one of the other areas. Even though sometimes we talk about how meme stocks don't trade in lockstep with each other, let alone the rest of the market, we're seeing that risk of feeling being felt here too.

MYLES UDLAND: Yeah. And I mean, I think, I mean, look at what's going on at NEGG, which we talked about yesterday. It's an online commerce thing. Our producer, Nick Monty, does know of Newegg, but the stock was up 150% yesterday just for funzies. Down some 20% in the premarket trade.

And look, the meme trade has been with the market through this whole period. We have never lost the role that the meme has played. It's just come-- it's rotated through its import, right? Right now, on a macro level, I would say it is relatively less interesting and notable than it was maybe six weeks ago, maybe two months ago.

Obviously, certainly, then back in the January and February time. But to see the air coming out of these names at the same time that there is some risk off trading happening in more liquid institutionally influenced markets like treasuries, is a reminder to folks that while the meme trade has had a lot-- You know, maybe even we could say majority retail participation, though I'm not sure that might fully check out. Institutions, big money traders, prop desks, hedge funds, they've gotten involved here.

They're all having a good time kicking around some of these names. Anybody can read Reddit. It's not just the media and teenagers at home or whatever, 20 somethings at home who are able to trade on Robinhood. Anyone can find this stuff.

And I think that it's been obvious for some time, but this is another reminder that there are big money players in these names. Because, Sozzi, to see this kind of action within the space on a day where the broad market is risk off, you know, this is de-risking across the portfolio happening. And I'm not exactly sure that your core AMC ape also has exposure to the 10 year, right?

They just have AMC. But if you're a big money hedge fund, you've got exposure across assets right now. And today a lot of it's pressure.

BRIAN SOZZI: Yeah. Shout out to those AMC apes watching us live here on Yahoo Finance. Two things I do want to note, our old friend the VIX is back above 20. It has not been over 20 since late May.

Secondarily, also watching some action in the semiconductor space, seeing a divergence here. Markets hit records yesterday. We're seeing Nvidia down over the past five days. A big sell off too, I would say, in A&D, down 4.5% the past five days, Julie.

So the chip sector is starting to diverge from the broader market. Usually not a good signal.

MYLES UDLAND: No. And thanks for calling that out, Soz. I know we'll get into that with Jared in a little bit. But that's been something we've talked about for some time, that the under 20 on the VIX tended to be a little bit more of an all clear for the market, at least in the post-- You know, we're still in COVID, but you know, that post 2020 COVID rally. All right, here we go.

Live pictures. Floor of the New York Stock Exchange. Clean battery solutions FREYR SPAC ringing the bell. Congrats to everybody on getting the deal done.

Of course, we know there are still hundreds of SPAC sponsors with hundreds of billions of dollars looking for targets. And so to see a deal consummated, always exciting there. And we'll see how we open. We're certainly getting our opening indications here on the major averages.

It'll take some time before we get full quotes on the indexes. Because, of course, you have to have enough individual names open for trade to get an index construction. And so we'll see if the futures-- If we get follow through from the futures to where the market opens.

And we see, you know, NASDAQ not yet an indication. 14,665, yesterday's record close, and now we got it off some 1.7%. All right, so let's go over to Julie Hyman standing by at the YFI Interactive touch screen. Julie, I think we've got a critical mass of names trading here that we've got something to go on.

JULIE HYMAN: Yeah. I know, we always have to wait a couple of minutes to make sure everything's settling out. But what doesn't close and so let's start here is crypto, right? That just trades right on through the opening bell. So if we look at the YFI Interactive, that's one piece that we didn't mention.

Brian talked about at the top of the show, but we haven't talked about it in this little go round. And this is another area where like meme stocks, doesn't necessarily correlate to anything. But we are seeing it swept up in this risk off attitude today.

So just to take Bitcoin as one example here, not only back below 34,000, but back below 33,000. And you see the five day action here on Bitcoin as we have seen it kind of go up, sort of approach that 36,000 level once again. And we can look at more of the tick chart here getting close to 36,000, but not quite breaching it here earlier in the week.

And now falling back down. So I'm sure that Jared would have better technical visibility into what potentially that is going to mean. All right, let's switch back on over to what's happening in the stock market as we have more of an opening indication here. The Dow indeed is down by a little more than 1% here.

The S&P off by 1.25%. And in classic sort of risk off fashion, right? The NASDAQ is taking the worst of it. We've seen that bit of a recovery in large cap tech as of late.

And so now people taking some money off the table in these names as we see this broad based risk off-- risk off route happening for the moment in today's session. You guys were just talking about the VIX and what's going on there. We've got now the VIX back towards 20 here. So this is something that we have been watching, because it's been pretty depressed.

And on this chart it puts in perspective that tick up today to 20 is nowhere near some of the volatility spikes that we have had even just year to date. So that is another way to put, you know, markets in turmoil in perspective that it's not really that much of turmoil, given where we have been.

MYLES UDLAND: To be clear-- To be clear, that's an ironic phrase from us, I believe, at this point.

JULIE HYMAN: Yes, indeed. Indeed. But to your point that you made earlier, Myles, the place that we are seeing more of a surprising sustained move is indeed in the bond market, right? That 1.29%, and it's been a slower, sort of more real move, if you will, beyond just these daily gyrations that would take us down in stocks 1%.

A 10 year-- A 10 year buying spree that we've seen that's taken us to 1.3% is indeed more significant perhaps. And then finally, to take us back over to the heat map. Look at this. In the NASDAQ 100, you don't see this too often.

The only stock in the green is Amgen? Look at that. That's pretty remarkable here. And Amgen is only up 8/100 of 1%. So again, just another illustration of the breadth of the sell off that we are seeing today.

Let's check on the sectors too, to see if it's there. Yep, there as well. All of the groups in the S&P 500 are trading lower today. So pretty broad based selling that we are seeing in today's session.