2 Signs the Market Is Coming Back

KEY POINTS: DO INVESTORS TRUST MARKETS AGAIN?

• Stock markets were on the rise again Tuesday — with signs the market is coming back.
• Alibaba shares spiked on news of a more extensive buyback program.
• GameStop stock maintained positive momentum.

The market rose on Tuesday, with solid gains suggesting investors have moved past all of the volatility that beset Wall Street recently. While there haven’t been many resolutions to the headwinds battering the business world, market participants still believe that the Nasdaq Composite (^IXIC) and other indexes’ bear markets are overblown. The Dow Jones Industrial Average (^DJI) rose 260 points to 34,831 at 1:30 p.m. ET Tuesday. The S&P 500 Index (^GSPC) climbed 44 points to 4,333, while the Nasdaq advanced 220 points to 14,058. From a few different perspectives, a few stocks exhibited new investor optimism. Alibaba Group Holding (NYSE:BABA) moved strongly higher, demonstrating renewed interest in Chinese equities. Meanwhile, GameStop (NYSE:GME) posted a significant increase in a sign that meme stocks are on the rise. We’ll examine the most recent developments from these firms in further detail below.

Alibaba Group Holding

Alibaba Group’s shares rose more than 12% in early afternoon trading on Tuesday. The Chinese internet giant made a big bet on its own stock, and investors were eager to follow along, and give us an indication the markets could come back. Alibaba announced that it would increase the scope of its stock buyback program, which they had previously set at $15 billion. The new authorization expanded that sum to $25 billion. Today’s action was the second time that Alibaba has increased the scale of its buyback plans; it began with simply $10 billion in December 2020. Alibaba’s share price has tended to fall in the wake of its prior buybacks, even though the company has made previous repurchases. For example, the firm’s most recent financial results revealed that it spent $1.4 billion on 10.1 million shares in the fourth quarter of 2021; however, shares fell more than 50% after that publication before rebounding. As a result, Alibaba’s share prices are approximately 10% to 20% lower than their average purchase price during the last three months. Investors in the United States remain uncertain whether the Chinese government will maintain a harsh regulatory crackdown on Alibaba and its major-tech peers. Nonetheless, with shares at bargain rates, it’s been harder to resist Alibaba than it has in a long time.

GameStop

Meanwhile, shares of GameStop rose over 30%. There was no major news from the meme stock today, but after having dropped to its lowest points since late 2020, GameStop appeared to have investors paying attention to what it thinks will be a bright future. Meme stock GameStop earnings last week didn’t produce an immediate turnaround for investors, but they appeared to be looking back at the numbers for reasons for optimism. Sales increased 6% from the previous year’s quarter and 18% from year-over-year throughout the 12 months. Despite a worsened adjusted loss margin compared with year-earlier levels, shareholders appear to be more focused on top-line growth potential. GameStop’s initiative to create a marketplace for non-fungible tokens (NFTs), might provide some interest. Even as the regular crypto market appears to be slowing down, NFT innovation has continued at a good pace. Retail investors helped propel GameStop’s stock upwards in its early phases, and they appear to be behind today’s rise. Of course, those investors are fickle. However, some genuinely believe that GameStop’s comeback narrative has a chance at achieving a Hollywood conclusion. https://www.mrktwire.com/stock-ideas/signs-market-will-come-back/?feed_id=4&_unique_id=623b367720b32