- The announcement of President Donald Trump Scanning, “reciprocal prices” attracted investors completely offset last week, but the news of negotiations and an erroneous report on a 90 -day break could have given traders a little hope. Meanwhile, hedge funds may have supported the share price because they covered their short positions.
The markets are running as if it were again in 2020 when investors continue to count with the radical “reciprocal prices” of President Donald Trump, leading to the most volatile session of Wall Street since the start of the Pandemic of Cavid-19.
The actions initially dropped on Monday before some big names in technology put a measured recovery. The S&P 500 plunged into the bear market territory to start the day, lowering 20% of the highest of the index, before erasing most of these losses to close 0.23% for the session. The Nasdaq Composite, heavy in technology, followed a similar model, ending with a 0.1%gain, while the Dow Jones fell by around 350 points after ending last week with consecutive losses of 1,500 points or more for the first time in its history.
The markets were simply not prepared for the protectionist measures that Trump unveiled on Wednesday in the Rose Garden of the White House, said Jay Hatfield, CEO of infrastructure capital advisers. A 10% coverage rate came into force on Saturday, but most imports should be imposed if these products come from countries that have trade deficits with the United States
“What we call the” graph of death “was completely unexpected,” said Hatfield, who manages ETF and a series of Hedge Funds.
However, Hatfield noted that actions did not go right on Monday on Monday, as administration officials said that more than 50 countries had called on the White House to negotiate, even if the reports of a 90 -day price break came wrong. When the S&P moved below 5,000, just over a month after exceeding the 6,100 mark, it sparked a natural level of support for the index, he said.
“We are starting to find a background,” said Hatfield. “But that does not mean that the bottom is not 4,800 or 4,600.”
Ironically, the share price could also have a boost because uncertainty remains high. The CBOE, or VIX volatility index, has briefly exceeded 50 several times throughout the session. Popularly known as Wall Street’s “Gauge Gauge”, the index is derived from the prices of S&P 500 options and has its highest peak since the pandemic.
Hatfield said that the increased volatility signals of hedge funds rightly have assured that they are well covered by PUT purchases or options of options that give investors the right to sell an underlying asset – in this case, S&P 500 term contracts – at a predetermined price.
The exercise of these options is profitable when the value of the index drops below the “exercise price” of the option. However, when volatility is high, traders are encouraged to relax these positions to ensure that they earn money before actions bounce.
“It’s actually a good thing about hedge funds,” said Hatfield. “They are the ones who make the purchase that the market stabilizes.”
For example, Hatfield’s little hedge fund charged on S&P 500 on Friday morning before liquidating them on Monday, which he could do because his long exposure to the index was limited.
“If you never cover your shorts,” he said, “you never earn money.”
Chip stocks rally, but Apple and Nike fall
Price uncertainty created several winners and losers on Monday. Popular flea actions have rallied, the actions of Bull Market Darlings Nvidia and Broadcom jumping 3.5% and 5.4% respectively. Amazon and Meta also helped to open the way to American technology giants, the two actions climbing more than 2%.
But Dollar Tree exceeded all these companies as one of the biggest winners of the day. About half of the products in the discount chain will be subject to prices, said Citi analysts, but the stock increased by 8% because they suggested that the company could increase prices without too much consumer decline.
For other major names, however, Monday offered little respite. Apple shares have lost almost a fifth of their value since Wednesday, the title fell by 3.7% for the session. The iPhone manufacturer is based strongly on China, which has been hit by a 54% rate which, according to Trump, will see another duty of 50% if Beijing does not withdraw its own reprisal measures.
It is a similar story for Nike, which produces most of its clothes in India and other countries in Southeast Asia, which have also been struck with heavy prices. The actions of Stellantis, Ford and other car manufacturers also continued to decrease while the industry was fighting with a price of 25% on all foreign cars and parts.
However, investors have not necessarily flocked to all types of security assets. Treasury bills were sold as the yield at 10 years increased by more than 20 base points to 4.20%, and the price of gold also dropped.
This story was initially presented on Fortune.com
