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GameStop shares fall 60 percent as Reddit-fueled rally reverses

The stock market rebounded early Thursday, a day after suffering its worst daily losses in months, while shares of companies favored by Reddit traders plummeted.

The Dow Jones Industrial Average was up more than 550 points shortly before 11:30 a.m., climbing nearly 1.8 percent after a Wednesday loss of more than 600 points. The S&P 500 index was up 1.6 percent, and the Nasdaq composite was up 1 percent.

While most of the stock market steam ahead, shares of companies once favored by Reddit traders fell sharply.

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GameStop stock collapsed by 62 percent shortly before 11:30 a.m., triggering multiple trading freezes. AMC Entertainment was down 67 percent, BlackBerry was down 44 percent and Nokia was down 30 percent.

Stocks as a whole took steep losses Wednesday ahead of a raft of corporate earnings reports as growing concerns about the pace of vaccine distribution and the proliferation of more contagious variants of the novel coronavirus grip the market. Meanwhile, stocks targeted by members of Reddit forum r/WallStreetBets cruised to mind-bending heights.

Major online trading platforms such as Robinhood and TD Ameritrade blocked or restricted trades of GameStop and other companies targeted by Reddit users Thursday morning, drawing intense backlash from traders. Critics, including some prominent lawmakers, argued that those decisions gave an unfair advantage to major investors and firms that had ample ways to buy GameStop shares.

"We need more regulation and equality in the markets. Instead of investing in future technologies to help America win the 21st Century, Wall Street poured billions into shorting this stock to crush this company and put workers out of business. The future of this country lies in that access and equality across every sector of our economy," said Rep. Ro KhannaRohit (Ro) KhannaPublic option fades with little outcry from progressives Democrats shift tone on unemployment benefits Khanna outlines how progressives will push in climate infrastructure proposal MORE (D-Calif.) in a Thursday statement.

Updated at 11:38 a.m.