Zhitong Finance APP learned that the U.S. stock market experienced a shocking reversal on Thursday, after the previously released U.S. inflation data for September was stronger than expected, which surprised many people on Wall Street.
The U.S. Department of Labor released Thursday data showed that the September core consumer price index (CPI), which excludes food and energy, rose 6.6% from the same period last year, the highest level since 1982. In September, the overall CPI rose 0.4% month-on-month, up 8.2% from the same period last year, with market expectations of 0.2% and 8.1% respectively. The inflation data exceeding expectations provides reasons for Federal to continue to make a big move in rate hike. After the
inflation data was released, futures contracts for S&P 500 index and Nasdaq 100 index fell sharply. shorting stock index futures looks like a must-win bet - it is true, until the market starts to show the opposite trend. Gareth Ryan, managing director of investment consulting firm IUR Capital, said that customers who shorted stock index futures suffered a heavy blow when the market trend reversed. "They don't have hedging upside risk."
ET on Thursday, the S&P 500 index recovered its early decline and rose 3%. In the process, the index rebounded 194 points after hitting a bear market low of 3491.6 points, and then rose to an intraday high.
has several factors that support US stock this jaw-dropping rebound.
One of the factors is technical: the S&P 500 index fell to a low of 3491.6 during the session, and has given up half of the post-epidemic gains , a threshold that triggered a wave of buying from funds managed by computers. Quincy Krosby, chief global strategist at
LPL Financial LLC, said that short cover for has also played a role. U.S. stocks fell 25% this year ahead of Thursday's rebound, prompting some Wall Street figures to believe that the stock market decline is coming to an end.
Krosby said that some Wall Street people believe that the US recession may not be that serious, "this is actually a big problem."
No matter what the long-term trend of the stock market is, the large number of options traders who bought put options before the CPI report were released, all felt the pressure.
Sundial Capital Research estimates that institutional investors spent more than $10 billion on the stock put option contract last week, a record high. Many contracts made profits as U.S. stocks fell to intraday lows on Thursday, causing traders to cover put positions. SpotGamma founder Brent Kochuba said market traders who had to respond to this flow bought the stocks, thus supporting the market's rise.
Kochuba said, "When the stock market hit 3500 points, traders did not have the intention to push the market further down." "At 9:30 am EST, when you hold a put option contract, you think you are the king of the world. Suddenly, this is not necessarily the case."
