The Dow Jones Industrial Average fell more than 292 points, or 0.9 percent, to close at 33,706.74. The broader S&P 500 lost 55 points, or 1.3 percent, to land at 4,228.48, while the tech-heavy Nasdaq fell 260 points, or 2 percent, to close at 12,705.22.
Investors are still grappling with the uncertain direction of the nation’s economy, with federal data offering conflicting perceptions. Earlier this month, analysts were stunned by a explosive work report, revealing a sizzling job market that strengthened more than expected with employers adding 528,000 jobs. But government data released days earlier also showed the economy had come into contact for the second consecutive quarter, a common recession marker.
How aggressively the Federal Reserve will move to combat inflation and the pace of price increases, which decreased in July, are still on the minds of Wall Street. Stocks have risen in recent weeks, in part, with investors buoyed by a growing sense that central bankers can successfully tame inflation without pushing the economy into recession.
Corporate powerhouses like Apple, Microsoft and Amazon have enjoyed double-digit gains in recent weeks, recouping some of their losses for the year.
Then there is Bed Bath & Beyond. It had soared more than 350 percent this month on a wave of enthusiasm from small investors after billionaire investor Ryan Cohen took a large stake in the struggling retailer. But the stock has been pushed into a multi-day free fall since GameStop’s president signaled that he would dump his stock. They fell 19.6 percent on Thursday and slipped another 40.5 percent on Friday, closing the week at $11.03. That’s still more than double what it was earlier this summer, before the spike in meme stocks.
“Bed Bath & Beyond stock is disconnected from fundamentals,” said Seth Basham, an analyst who covers retail stocks at Wedbush Securities. Cohen’s retirement was a major catalyst in the stock’s downgrade, he said, as one of the company’s main instigators of a successful turnaround changed his position.
Cohen’s RC Ventures confirmed in a regulatory document who sold his entire stake in Bed Bath & Beyond. It made a profit of more than $58 million, according to MarketWatch, after selling 7.78 million shares at weighted average prices ranging from $18.68 to $29.22.
Shares of Bed Bath & Beyond have now lost more than half their value since their recent peak, when they rose well above $20 a share. The rollercoaster moves and huge trading interest echo the meme trading frenzy of 2021, when many novice investors, lured by the hype and the potential for huge profits, ended up losing big.
Last month, the troubled housewares chain was trading near $5. But investors flocked, buying an optimistic view of the company or simply betting on a cycle of increased speculation and higher prices, echoing the astonishing rush to stocks like GameStop, AMC and BlackBerry that took Wall Street by surprise last year.
Cohen, who co-founded the online pet supply company Chewy, has significant clout among small investors due to the pivotal role he played in GameStop’s rise. It took a major stake in 2020 through RC Ventures even though the gaming chain had been dismissed as a relic of an earlier era, one in which a massive retail footprint was essential and when consumer interest was defined by Black Friday crowds and the blockbuster game. releases
Cohen offered investors a forward-looking vision for the games retailer, focused on digital sales, esports, streaming and mobile gaming. His view caught on, sparking interest on web forums where collective optimism set in and many saw an opportunity for big profits by betting against the institutional wisdom of Wall Street. His interest in Bed Bath & Beyond generated a similar enthusiasm.