This translation has been automatically generated and has not been verified for accuracy.There is more behind the recent slide in U.S. stocks than weak data, according to JPMorgan Chase’s head of quantitative and derivatives research, who says options hedging and technical selling contributed to the gyrations and could help the market reverse course and rally.
The benchmark S&P 500 index shed 3% over the first two days of October, logging its worst two-day performance since early August, after employment and manufacturing data revived worries that the U.S.-China trade war is taking an increasing toll on the U.S. economy.Dismal manufacturing data on Monday dragged the S&P down past several technical levels, prompting dealers who had earlier sold options to add to the selling pressure as they hedged their positions, Kolanovic said.
To counter this exposure, they sell increasing amounts of S&P 500 futures as the index falls, thereby adding to selling pressure.
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