David Solomon, the chief executive of Goldman Sachs, is not normally found walking the bank’s trading floor. Monday, however, was an abnormal day for many on Wall Street. Solomon headed down to the fourth floor of the bank’s Tribeca headquarters as its traders grappled with one of the most chaotic days of market action in recent years. He was not the only senior figure stalking the front office.
Japanese stocks had also been boosted by domestic retail traders using high amounts of leverage; when those positions began losing value, margin calls for more collateral led to additional forced selling. In the US, funds that use algorithms to follow market trends were particularly caught out by the string of disappointing economic data. Société Générale’s CTA index, which tracks the performance of 20 of the largest such funds, fell 4.