At times this week, as Wall Street and the ASX have swung from strong gains to heavy losses within the space of hours, that mood has felt a lot like panic.
In another week of severe equity turbulence, the S&P 500 saw three of the biggest intraday reversals of the decade, Microsoft Corp. swung 15% in 15 hours, and stock volatility doubled.
In the end, for one last twist, the index rallied Friday, erasing losses for the week to post one of its smallest wire-to-wire moves in months.
It was the final irony for a week in which investors just couldn’t make up their minds, amid a panoply of warring narratives. On one side was Jerome Powell, suddenly the enemy, refusing to commit to keeping rate hikes gradual. On the other was the booming economy, promising to blot out the impact of anything the Federal Reserve might throw in its path.
Beneath it all was dwindling liquidity, the thinnest since the pandemic crisis, making every swing worse and sending traders to the options market for protection like never before. Trepidation, with total put option trading surging to a record.
Over at investment bank KBW, two types of traders stood out to R.J. Grant, the director of equity trading. Those bailing in order to go bargain hunting later, and those who are just bailing.
