U.S. markets close in 6 hours 30 minutes
  • S&P 500

    3,805.08
    +36.61 (+0.97%)
     
  • Dow 30

    31,204.01
    +279.87 (+0.91%)
     
  • Nasdaq

    12,723.47
    -274.33 (-2.11%)
     
  • Russell 2000

    2,146.92
    -60.87 (-2.76%)
     
  • Crude Oil

    65.72
    +1.89 (+2.96%)
     
  • Gold

    1,704.40
    +3.70 (+0.22%)
     
  • Silver

    25.48
    +0.02 (+0.07%)
     
  • EUR/USD

    1.1945
    -0.0034 (-0.29%)
     
  • 10-Yr Bond

    1.5800
    +0.0300 (+1.94%)
     
  • GBP/USD

    1.3863
    -0.0031 (-0.23%)
     
  • USD/JPY

    108.2490
    +0.2730 (+0.25%)
     
  • BTC-USD

    48,607.80
    -869.65 (-1.76%)
     
  • CMC Crypto 200

    972.23
    +29.06 (+3.08%)
     
  • FTSE 100

    6,703.68
    +52.80 (+0.79%)
     
  • Nikkei 225

    28,864.32
    -65.78 (-0.23%)
     
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Here are the tough questions Congress needs to ask about GameStop today

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Yahoo Finance’s Jared Blikre, Brian Sozzi, Julie Hyman, and Myles Udland preview the GameStop Congressional hearing happening today.

Video Transcript

JULIE HYMAN: We are watching futures pull back here this morning, indicating a lower open. Really, though, the main event for market participants is likely not going to be in the markets themselves but the discussion about something that happened in the market. I'm referring, of course, to the hearing that's happening on Capitol Hill today, or at least virtually on Capitol Hill.

The House Financial Services Committee going to be speaking to people from Robinhood, Citadel, Melvin Capital Management, Reddit, and Elsewhere to try to get to the bottom of the GameStop and meme stock feeding frenzy, why it happened, and what, if anything, was wrong with it from a legal and policy perspective.

And one of the things that's sort of at the center of the discussion here besides why Robinhood had to halt trading and other brokerage as well had to halt trading temporarily in GameStop is the idea of price discovery and selling order flow, which is something that Robinhood and the other brokers do to some of the market makers, who then match prices and sometimes take profit as a result of that matching prices.

Jared Blikre has been looking into all of this. You know, I think price discovery is sort of one of the more wonky parts of all of this. But I wonder if that's the part that at some point is going to get some scrutiny today, one would hope.

I mean, when you're talking about price discovery and the best prices being achieved for the retail investors who are on Robinhood and Elsewhere, we're talking about what fractions of the cent in a lot of cases here, right? I mean, break it down for us. What question do you think they should be asking on this front? And what, if anything, needs to change?

JARED BLIKRE: Well, yeah, tons to unpack here. And we can get really in the weeds with this because it almost boggles the mind that we're having a congressional hearing on market microstructure. And even though this is a Financial Services Committee, there are very few people on that panel who are going to truly understand what's going on. So it's important to make the case.

And you talk about price discovery, that's the entire purpose of auction markets is to discover prices. And what are those actual prices? Well, we don't know because there are all kinds of prices flooding the market at different times with different lags. I mean, that's going to be-- that's the new norm.

And speed is only going to increase, where-- I'll tell you what. Let's go to the WiFi Interactive because I have a quote from a paper, a study, and this is going to be really wonky and I'll break it down. But this is a study that measured outages in Robinhood. And they found robust evidence that Robinhood platform outages are associated with improved market quality among stocks favored by Robinhood investors with no differences for these pseudo outages.

For example, using Wall Street Bets as a proxy for Robinhood stocks, we find that outages are associated with price impacts that are 5.1 basis points lower relative to a mean of 61 basis points. So maybe it is that the Robinhood investors, when they exit the market because Robinhood platform shuts down, the prices improve for everybody else. And maybe it's because of the nature of the way they make their bets, they make their trades.

Or maybe its payment for order flow. Because the same study also found that reduce-- they actually found reduced high frequency trading in the stocks that Robinhood traders were trading when these outages occurred. So lots to unpack here and lots to question. I just hope it doesn't become a witch hunt for Keith Gill.

BRIAN SOZZI: You know, Jared, I know we had the opening bell on Wall Street. But Jared, I did want to ask you, because if we do get, in fact, some form of legislation off of this-- off of this event, would that make markets less efficient?

JARED BLIKRE: Well, any time you send in the government with a mandate to create more regulations, they can become less efficient. But I think there is a light being shown on dark pools. And no pun intended there, but effectively what Citadel is doing is matching orders behind the scene. That's a dark pool.

We have tons of private exchanges in addition to the public exchanges like NYSE Arca, NASDAQ, et cetera. And all of these different firms acting together comprise a marketplace that's really crowded. And the prices that the retail investor have gotten, the quotes that the retail investor have gotten through the National Best Bid Offer system, those have been really, really slow compared to what you can buy if you're a hedge fund.

And so when we talk about price improvements for retail investors, we're really measuring them off of a very low bar. And I think that bar could be improved. I think the entire structure of the market could be improved. But I'm not that hopeful that's what's going to come out of this. Maybe I just am a cynic by nature. Maybe.

MYLES UDLAND: I will say, though-- I will say, though, Jared, and I think it's interesting to also then kind of break this down further into, are we discussing-- I mean, this goes back to, like, Michael Lewis and "Flash Boys" and what Brad Katsuyama started bringing up. That is about, can you get good and fair pricing if you are an institutional trader, if you are trying to execute a block trade for, let's say, a corporate client that's repurchasing shares? Or let's say, a pension fund that wants to rebalance their portfolio.

We're talking tens of millions of shares of stock that can impact bids. And that kind of research that you are citing, we're talking about an improvement that matters to market makers, market participants, who are dealing with nine digits worth of money on a daily basis. And I think that is a conversation that is completely separate from, what role does Robinhood play in someone who wants to turn 10 grand into 15 grand?

That investor has never had it better. And I think that that is the part that's a little bit lost. Any one of the four of us right now could go make a deposit, could be 10 bucks, 100 bucks, could be $10,000, in a Robinhood account right now and start trading and get pretty good marks, I think we would agree, right, relative to what that experience would have been like even just five years ago.

JARED BLIKRE: Yeah, I'd have to say I agree with that. And that can be and probably is a separate discussion. But the purpose of high frequency trading largely is to fill those large orders. And over the years, that was an increasing trend. But recently within the last few years, we've seen the rise of over-the-counter trading again, people picking up the phone and conducting their orders that way.

Because eventually, high frequency trading kind of let them down. And there's so many of them that they just arbitrage themselves all out of their business. But then comes along payment for order flow, rise of the retail trader. And I think it brought them a new source of revenue, a new source of trades to be arbitraged. So a dying industry was kind of revived by this PFOF payment for order flow, and that needs to be investigated.

Well, let's get a check on the markets here. We're seeing the Russell 2000 down about 1%, NASDAQ is off the most, sets off about over 1%, and the Dow is off 7/10 of a percent. And looking at the NASDAQ 100, we see the mega caps under pressure here, Apple extending its two-day loss down, another 1.5%. Microsoft and Amazon each off 1%, and Facebook off 1.5%.

Checking in on the sector action, we got utilities, the only sector in the green now. We do see the 10-year T-note yield rallying. So I'm curious as to why we would see those in the forefront. But nevertheless, tech and energy and discretionary, those are the biggest losers, each off 1%.

Checking in on Bitcoin here, we see Bitcoin's up another 2% to a record high. That is just short of 52,000 here, having hit that record overnight. Ether also up 5.5%. And then let's get a check on GameStop here. So we have our heavily shorted board GME up 3% ahead of these hearings.

Pretty interesting, too, I just saw a header before about AMC. We have to see if it's verified, but could see some action on AMC today as well. That's up 9%, by the way. Guys.

JULIE HYMAN: Yeah, and I saw there Palantir on your board, Jared, which-- whose lock-up expiry is today. That means insiders can sell their shares today, so hence the drop that we're seeing there. We also got to talk about the Texas ripple effect, right, which continues in the energy complex. Nat gas, oil, all of the supplies being constrained by what continues to happen down there.

JARED BLIKRE: Yeah, and let's get a check on the commodities markets because we've really seen a bid for crude oil and natural gas as well. Natural gas is off today, by the way. And these effects that weather have on the price of commodities, those tend to be transitory. You can see some squeezes either way.

But I think the biggest decision in the room is going to be by OPEC plus, what we see happens with them. And they're meeting every month, so we'll get some headers on that in a couple weeks at the beginning of March. But for now, WTI above $61 per barrel. You take a look at a two-year chart, the pre-COVID price was right around $65. That was-- and $60 was kind of a mean for a while.

So it's like nothing happened for crude oil except that it did go negative that one time to $40 below zero.

JULIE HYMAN: Indeed, it did. And remember, we talked to Phil Streible the other day about what's going on in oil and gasoline by extension. And he talked about higher gas prices, gasoline prices that is to come.