Markets slip from record highs, GameStop shares continue to surge, and lawmakers propose phasing in a $15 minimum wage. Here's how the headlines could affect your money.
The stock market submitted a staid performance Tuesday. The S&P 500 sank 0.2% from all-time highs, the Dow Jones Industrial Average fell by 0.1%, and the Nasdaq slipped 0.1% from its record.
Wednesday morning, the major indexes fell sharply as traders digested mixed corporate earnings and waited on news from the latest Federal Reserve policy meeting.
Shares in video game retailer GameStop climbed an astounding 93% to $147.98 by the end of Tuesday's session, marking a more than 680% increase just in January 2021. The stock's stratospheric rise is largely due to a buying frenzy among retail investors in online forums, such as Reddit's WallStreetBets page, who have forced a massive short squeeze as professional investors move to bet against the stock.
Other forms of social media are playing a role as well. The shares moved sharply higher on Tuesday after Social Capital CEO Chamath Palihapitiya said in a tweet that he bought GameStop call options.
The shares climbed another 60% in after-hours trading after Tesla CEO Elon Musk tweeted a link to WallStreetBets and commented, "Gamestonk!!" — a reference to a meme about online traders.
Although trading stocks during a craze has undeniable allure, attempting to time stock-market moves is extremely tricky, and long-term investors should assess the fundamentals of any stock they hope to buy and hold in their portfolio.
Democrats in the House and Senate introduced a bill Tuesday that would gradually hike the federal minimum wage to $15 per hour by 2025. It's currently $7.25 and has been since 2009.
Some 17 million low-wage workers stand to immediately benefit if the minimum wage were to be raised to $15 by 2025, according to a 2019 report by the Congressional Budget Office.
Video by Stephen Parkhurst
Call options are a type of option trade that gives the trader the right to buy shares of stock at a specific price (known as the strike price) by a specified date, when the option expires. You pay a small amount of money up front to exercise your option later. Call options can increase dramatically in value if the price of the underlying stock goes up beyond the strike price.
Although the daily news can have an impact on your wallet, remember to take a long-term outlook when it comes to decisions on spending, saving, and investing.
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