Even Stocks at Record High Can't Lure Traders to Place Any Bets

(Bloomberg) -- Stock traders seem to be losing faith in U.S. equities even as the S&P 500 Index touches a new high.

The $276 billion SPDR S&P 500 ETF Trust, a popular stock-market proxy, traded about 40% below its 20-day average for the time of day as of 12 p.m. in New York, data compiled by Bloomberg show. Activity has been depressed all week, with volumes in the exchange-traded fund, known as SPY, slumping to the lowest since mid-July. Meanwhile, overall trading on U.S. exchanges has lagged the 12-month average for the last nine trading days.

Despite a swath of high profile earnings, with more than one-fifth of companies in the S&P 500 reporting since Monday, the measure traded within its tightest weekly point range since December 2017 -- until signs of headway in the U.S.’s ongoing trade dispute with China boosted stocks to a record. But with the Federal Reserve due to meet next week, many traders are still on the sidelines, waiting to see whether gains will continue or fade.

“It seems like it has hit a ceiling,” said Mohit Bajaj, director of ETFs at WallachBeth Capital. “We keep hitting this peak in the S&P and bouncing from that so it’s hard to have conviction at the moment. With earnings, people watch them, but they don’t drive the market like they used to, plus there is a Fed meeting next week, which won’t help volumes.”

While trading in SPY averaged 131 million shares a day last October, fewer than 36 million shares in the ETF changed hands on Wednesday and Thursday this week. Friday is also shaping up to be a quiet session, with about 14 million shares traded as of noon.

--With assistance from Luke Kawa.

To contact the reporter on this story: Rachel Evans in New York at revans43@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Randall Jensen, Brendan Walsh

©2019 Bloomberg L.P.