Yesterday Was a Session for the Record Books

Yesterday Was a Session for the Record Books

Just like that, volatility returned to the stock market yesterday.

The S&P was on pace for its best gain in almost two months, and then President Donald Trump began tweeting at 1:26 p.m. ET.

“The U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China,” he announced. “This does not include the 250 Billion Dollars already Tariffed at 25%.”

Suddenly sellers came out of the woodwork. Here are some of their accomplishments:

  • The S&P 500 reversed from a gain of as much as 1.8 percent to a drop of almost 1 percent.
  • That quick change of sentiment caused the index to swing 68.36 points from its high of the session to its low. That was the widest range since Dec. 7, according to a custom indicator created with EasyLanguage®.
  • Crude oil futures fell as much as 8.5 percent at their low. That was the biggest drop since at least May 2001, according to another custom indicator.
  • The yield on 10-year Treasury notes fell to its lowest level since Nov. 8, 2016 — the same day Trump was elected.
  • Cboe’s Volatility Index ($VIX) has risen 5.7 points since last Friday. If that holds it would be the fear gauge’s heftiest weekly increase since December.

Of course, some of these superlatives result from things getting so quiet. But now investors have digested a lot of earnings and news from the Federal Reserve. Will attention now turn back to the old bogeyman of tariffs and trade — especially with other catalysts drying up next week?

In conclusion, Thursday was one of the more dramatic sessions of the year. We’ve also started a new month on a bearish foot. And pretty soon volumes will slow as investors go on vacation.

This post isn’t trying to make any calls or predictions. We just wanted to highlight how things may be changing.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.