S&P 500’s Night Terrors Are Rivaling the Roughest Stretches of Last Crisis
Every day’s an adventure for stock traders lately.
(Bloomberg) -- Every day’s an adventure for stock traders lately. Ask anyone at work Thursday. But for a real dose of equity volatility, you need to sit up for the overnight session in S&P 500 futures.
Rife with trade and earnings news that lands amid dicey liquidity, the period from the close of U.S. exchanges till the open has been teeming with big price swings. To distill the effect, Sundial Capital Research founder Jason Goepfert calculated the number of sessions when the drop was at least 0.35% over three-week periods.
In the most recent span, there were 10. Since futures on the S&P started trading in 1982, that’s happened only twice. One was at the bottom of the market correction in 2002, another during the financial crisis in 2008.
The chance things will go from bad to worse overnight is one of many psychological stresses battering investors who are suddenly confronted with the latest rough patch. The S&P 500 dropped for the fourth time in five days Thursday, marking the third time in three weeks a single-session loss has exceeded 1.2%, while the Nasdaq 100 extended its loss since May 3 to 6.7%.
“You have a ton of news to digest between 9:30 and 4, and then it piles on and exacerbates it,” said Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, which oversees $1.8 billion. “People are on edge and waiting for the next shoe to drop.”
Markets are in better shape than they were in 2002 and 2008, but the magnitude of swings between the close and open underscores the pressure traders confront as they’re bombarded with headlines. The S&P was 0.69% lower at Thursday’s open from Wednesday’s close, the fifth down gap of at least 0.3% since May 13. A chart showing a 10-day average gap between the cash session open and its prior close shows a similar trend.
When traders in Asia and Europe panicked earlier this month, U.S. investors were happy to jump in and buy the dip, but that eagerness may be fading as stock pickers dig in for what looks like a protracted trade dispute. Goldman Sachs Group Inc. now sees higher odds of a U.S.-China stalemate, and Nomura Holdings Inc. has shifted to forecasting a full-blown escalation of tariffs.
Stocks in the S&P 500 fell 1.2% on Thursday as the gauge headed for the third consecutive down week, the longest losing streak since December.
To contact the reporter on this story: Elena Popina in New York at epopina@bloomberg.net
To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, ;Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh
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