U.S. Stock Trading Hasn't Spiked. That Could Fuel a Bigger Rout

(Bloomberg) -- The S&P 500 Index has fallen more than 4 percent during the last six days, but you wouldn’t know it from trading volume.

An average $352 billion has crossed U.S. exchanges each day this month through May 10, according to data compiled by Bloomberg. That might sound like a lot, but activity is still far lower than in October, November or December.

U.S. Stock Trading Hasn't Spiked. That Could Fuel a Bigger Rout

The relatively subdued action could be exacerbating the sell-off. Thin liquidity encouraged wild price swings during the fourth quarter, strategists at JPMorgan Chase & Co. said earlier this year. And Marko Kolanovic, the bank’s global head of macro quantitative and derivatives research, has since pointed to a strengthening negative correlation between volatility and liquidity.

The Cboe Volatility Index is set to close at its highest since January. Trading on the S&P 500 was 14 percent above the 30-day average as of 11:23 a.m. in New York on Monday.

Less trading doesn’t necessarily inhibit the absorption of big buy or sell orders that can lead to larger moves in price, but the two are related. Volume jumped above $400 billion on May 7, yet that was only the fifth-highest daily turnover this year. Some 11 days exceeded that amount in December.

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