(Bloomberg) -- Equity investors are getting used to whiplash.
They got a dose today, when the S&P 500 wiped out a 1.4 percent rally. And the day before, when a 1.9 percent loss was erased. So far, there have been six days this quarter when stocks completely reversed an intraday move of at least 1 percent, the most since 2011, when Standard & Poor’s downgraded the U.S. sovereign rating, sending stocks to the brink of a bear market.
The back-to-back reversals underline the market’s nervousness as bulls and bears debate fast-shifting narratives on interest rates and U.S.-China trade. While the S&P 500’s bounce from below 2,600 signaled to some that a floor may be forming, its failure to hold above 2,650 became grist for arguments against more upside.
The flip-flops are particularly frustrating for money managers, who have been off guard during the latest market turmoil, according to Mike Wilson, chief U.S. equity strategist at Morgan Stanley. Take hedge funds, for example. Data from Goldman Sachs and JPMorgan showed they were just starting to warm up to stocks before last week’s tumble.
“For our regular conversations with clients over the past month, we sense too many have been caught buying the highs and selling the lows,” Wilson wrote. “But what’s what choppy markets are designed to do -- trap you -- and why our advice has been to fight the momentum on both the upside and downside.”
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