At the opening bell on Thursday, an unusually large wave of selling hit the New York Stock Exchange, with thousands of stocks sliding in tandem. The market was already nursing trillions of dollars in losses and yet few on Wall Street panicked.
“Despite some of the volatility and the moves it is actually very calm,” said Todd Sandoz, the co-head of Barclays’ equities sales and trading business. “You can feel it walking across the trading floor. It’s quiet.”
Even as the S&P 500 entered bear market territory and more than 3,500 US stocks fell to new 52-week lows this past week, gauges of volatility have not signalled the kinds of market distress registered during violent past episodes such as the start of the coronavirus pandemic in March 2020, the Chinese economic slowdown in 2015 or the US debt downgrade in 2011.
Instead, investors seem to be adjusting quite calmly to a new world order in which central banks act aggressively to tame high inflation rates, with an uncertain impact on economic growth. The Federal Reserve, Swiss National Bank and Bank of England all raised interest rates this past week, with the Fed announcing its biggest hike in almost 30 years. Higher rates reduce the relative value of stocks that promise profits further into the future, encouraging a sell-off that many investors and traders expect to continue. The S&P 500 has fallen 23 per cent so far this year while the Nasdaq Composite — which is dominated by fast-growing technology companies that are particularly exposed to higher interest rates — is down more than 30 per cent.
Coordinated selling hit stocks on the New York Stock Exchange this week
Daily minimum and maximum of the Tick index from Jan 2 2020 to Jun 17 2022. The index measures the number of stocks advancing each moment, minus the number of NYSE-listed stocks declining.