Stock Market Today: Small Caps Shine as Meme Stocks Rise Again

Is it the return of the "meme stock"? Gains in GameStop, AMC Entertainment led a Wednesday rally in the small-cap Russell 2000.

AMC Theatres
(Image credit: Getty Images)

Wednesday marked the 125th anniversary of the Dow Jones Industrial Average's founding, but the spotlight belonged to small caps thanks in part to a resurgence in so-called meme stocks.

GameStop (GME (opens in new tab), +15.8%), which made headlines earlier this year amid a massive short squeeze, has rocketed higher yet again recently after the company quietly revealed that it was getting into non-fungible tokens (NFTs).

Meanwhile, AMC Entertainment (AMC (opens in new tab), +19.2%), a movie-theater chain that was also caught up in January's short-squeeze action, flew higher today on no positive news; in fact, B. Riley analyst Eric Wold downgraded the stock to Neutral, saying "we are moving to the sidelines with an inability to justify taking that ($16 price target) any higher at this point." AMC closed Wednesday's trading at $19.54.

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These gains – as well as advances in many small-cap reopening plays, such as Express (EXPR (opens in new tab), +25.9%) and Bed Bath & Beyond (BBBY (opens in new tab), +11.6%) – helped the Russell 2000 jump 2.0% to 2,249.

The larger indexes were positive, too, though more modestly so. The Nasdaq finished 0.6% higher to 13,738, and the S&P 500 gained 0.2% to 4,195.

The Dow wasn't particularly celebratory on its 125th birthday, closing out with a marginal gain to 34,323.

"Today marks, in many ways, the birthday of my profession. On May 26, 1896, Charles Dow first published a list of 12 industrial companies, combining their prices in an index for the first public index of the stock market," says Brad McMillan, chief investment officer for Commonwealth Financial Network. "Note that phrase, because a standard of measurement – an index – was the necessary first step in transforming a market of stocks (i.e., individual companies) into a stock market.

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"Before, we had a bunch of trees, and it was hard for investors to see the forest. Dow put the forest front and center with his index."

Other action in the stock market today:

  • Retail earnings are rolling in, and results from department store chain Nordstrom (JWN (opens in new tab), -5.8%) and specialty apparel maker Urban Outfitters (URBN (opens in new tab), +10.0%) were in focus today. A wider-than-expected first-quarter loss knocked JWN shares lower, while URBN stock got a lift after the retailer reported top- and bottom-line beats in its Q1 and said same-store sales surged 51% year-over-year.
  • Ford (F (opens in new tab), +8.5%) was a big winner after the automaker made a number of well-received announcements at its annual investor day. As part of new CEO Jim Farley's new Ford+ plan, the company is aiming to boost investment in electric vehicles (EVs) to $30 billion through 2025 – $8 billion more than it announced in February – and said it expects 40% of its global sales to come from EVs by 2030.
  • U.S. crude oil futures edged up 0.2% to settle at $66.21 per barrel – a fourth consecutive gain.
  • Gold futures rose 0.2% to finish at $1,901.20 per ounce, their loftiest settlement since Jan. 7.
  • The CBOE Volatility Index (VIX) declined 7.0% to 17.52.
  • Bitcoin prices rebounded 3.4% to $38,544.90. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

stock chart for 052621

(Image credit: YCharts)

Keep Your Eyes on Value

The Q1 earnings calendar is winding to a close, leaving precious few potential earnings beats to help offset investors' concerns during a volatile stretch for the markets.

Still, the pros are signaling that 2021 should remain a productive year.

"CFRA has raised its 12-month target price for the S&P 500 to 4,620, representing a 10.3% projected price appreciation from the May 25 closing value," says Sam Stovall, chief investment strategist for CFRA.

While he admits that gains could be tamped down by a smaller infrastructure package and inflation concerns, he says "equity prices should continue to be propelled by increasingly encouraging global GDP and EPS growth projections as the worldwide economy continues to emerge from the COVID clampdown."

That should mean additional upside for airline stocks, restaurant picks and other travel-related plays, which have cooled off in recent weeks. However, you can also set yourself up for gains by sticking with value – in the few places you can find it, anyway.

The broader market is downright frothy at the moment, but we've identified a number of value-priced income picks – specifically, S&P 500 Dividend Aristocrats that are cheaper than the market at current prices. Read on as we explore these relative bargains.

Kyle Woodley
Senior Investing Editor, Kiplinger.com

Kyle is senior investing editor for Kiplinger.com. As a writer and columnist, he also specializes in exchange-traded funds. He joined Kiplinger in September 2017 after spending six years at InvestorPlace.com, where he managed the editorial staff. His work has appeared in several outlets, including U.S. News & World Report and MSN Money, he has appeared as a guest on Fox Business Network and Money Radio, and he has been quoted in MarketWatch, Vice and Univision, among other outlets. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.