2 signs investors are regaining their confidence in the stock market

Indexes were higher, and a couple of stocks showed just how much enthusiasm there still is for the market.

| More on:
A young boy dressed in an old man-style cardigan with business shirt and bow tied wearing big spectacles smiles to himself as he sits at a laptop computer at a desk with hands on keys.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The stock market continued its recovery on Tuesday, with solid gains that suggested investors have gotten past all the uncertainty that has hit Wall Street recently. There hasn't been much resolution to all the headwinds buffeting the business world, but market participants nevertheless seem to believe that the bear market in the Nasdaq Composite (NASDAQINDEX: ^IXIC) and corrections in other indexes have been overblown.

As of 1:30 p.m. ET today, the Dow Jones Industrial Average (DJINDICES: ^DJI) had risen 260 points to 34,831. The S&P 500 (SNPINDEX: ^GSPC) rose 44 points to 4,333, while the Nasdaq had gained 220 points to 14,058.

A couple of stocks stood out as showing new signs of investor enthusiasm from a couple of different angles. Alibaba Group Holding (NYSE: BABA) moved sharply higher, showing renewed interest in Chinese stocks. Meanwhile, GameStop (NYSE: GME) posted a massive advance in a victory for meme stocks. Below, we'll look more closely at the latest from both of these companies.

Alibaba boosts its buyback

Shares of Alibaba Group were up more than 12% in early afternoon trading on Tuesday. The Chinese internet giant made its own big bet on its stock, and investors were eager to ride its coattails. 

Alibaba announced that it would increase the size of its stock repurchase program. Previously, the tech company had authorized $15 billion to buy back stock, but the new authorization expanded that plan to $25 billion. Indeed, today's move marked the second time Alibaba had raised the size of its buyback plans, having started with just $10 billion in December 2020.

Alibaba's past buyback activity hadn't prevented a swoon in its share price up to this point, however. The company's most recent financial results showed that it spent $1.4 billion repurchasing 10.1 million shares in the fourth quarter of 2021, yet shares went on to lose nearly half their value after that report before bouncing back. Even now, share prices are 10% to 20% below the average price Alibaba paid on its repurchases during the last quarter.

U.S. investors remain concerned about whether the Chinese government will continue a harsh regulatory crackdown on Alibaba and its big-tech peers. Nevertheless, with shares at bargain prices, it's been harder to pass up Alibaba than it has been for a long time. 

Winning the game

Meanwhile, shares of GameStop were up nearly 30%. There wasn't any particularly noteworthy news from the meme stock standout today, but after having fallen to its worst levels since its late 2020 breakout, GameStop seemed to have investors focusing on what it hopes will be a promising future.

GameStop's earnings last week didn't generate an immediate turnaround, but investors seem to be looking back and finding reasons for hope from the numbers. Sales were up 6% from the previous year's quarter and rose 18% year over year for the full 12-month period. Even though adjusted losses widened from year-earlier levels, shareholders now seem to be focusing more on the potential for top-line growth.

One thing that could generate some excitement is GameStop's plan to establish a marketplace for non-fungible tokens (NFTs), which have gotten a lot of attention lately. Even as the traditional crypto market has shown signs of slowing down, innovation in the NFT arena has continued at a healthy pace.

Retail investors helped drive GameStop's stock higher in its initial phase upward, and they seem to be behind today's move as well. Those investors can be fickle, but some truly see real potential for GameStop's turnaround story to get a Hollywood ending. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 

More on International Stock News

A man looking at his laptop and thinking.
International Stock News

Why Alphabet stock was sliding today

Let's take a look.

Read more »

A man looking at his laptop and thinking.
International Stock News

Nvidia's stock was down despite its amazing earnings. Here's what history says is coming next

Although it might seem to defy logic, it's not an uncommon phenomenon.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Nvidia share price slips despite 94% revenue growth

Q3 earnings beat expectations, but what about guidance?

Read more »

high, climbing, record high
International Stock News

Could the S&P 500 Index hit 6,500 by the end of 2025?

Could the index climb higher?

Read more »

a small child holds his chin with his head on the side in a serious thinking pose against a background of graphic question marks and a yellow lightbulb.
International Stock News

Is it too late to buy Nvidia shares?

Is Nvidia stock a buy ahead of its third-quarter earnings report tomorrow?

Read more »

a group of people stand examining a large glowing cystral ball held in the hands of one of the group members while the others regard it with various expressions of wonder, curiousity and scepticism.
International Stock News

Here's what to expect from Nvidia on November 20

Can Nvidia score another win?

Read more »

Two people lazing in deck chairs on a beautiful sandy beach through their hands up in the air.
International Stock News

2 no-brainer Warren Buffett stocks to buy right now

While replicating Buffett's success isn't possible, there are a handful of his investments that are no-brainer buys.

Read more »

A man with a beard and wearing dark sunglasses and a beanie head covering raises a fist in happy celebration as he sits at is computer in a home environment.
International Stock News

3 reasons to buy Nvidia stock before November 20

This week marks a big moment for tech investors as perhaps the most anticipated earnings of the year will be…

Read more »