Sharp stock moves are punctuating the final minutes of the trading day, exacerbating what has already been one of the rockiest stretches of the past decade for financial markets.
Major U.S. stock indexes peaked in mid-February and have since dropped at least 19%, with the Dow Jones Industrial Average entering a bear market, reflecting worries that the coronavirus epidemic will halt growth and eventually tip the economy into a recession. Trading toward the end of the session Wednesday was turbulent and selling in the last minutes of the day pushed the Dow into its bear market.
As investors have fled stocks and rushed into safe-haven assets like government bonds, sudden late-day moves in the stock market have been a staple, creating climactic swoons—and surges—right before the 4 p.m. closing bell.
Patrick Nichols, a partner at trading firm Old Mission Holdings, said he often trades at the end of the session, when exchange-traded funds, pension funds and other investors are also active.
There has been more activity there “than at any other time on planet Earth,” said Mr. Nichols. “Volatility has been exacerbated into the close.”
The past few weeks have been particularly busy, he said.
Traders can enter orders to buy and sell in the closing auction throughout the trading day, but such activity tends to heat up toward the end of the day. In the closing minutes of trading, stock exchanges indicate whether there are more buy or sell orders for stocks and exchange-traded funds ahead of the end of the trading session.
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