With overeseas stock markets taking one of their biggest tumbles in recent weeks, it looked like another fearsome Friday for US investors.
US stocks opened sharply lower, but failed to trigger NYSE circuit breakers—which would put a temporary half to trading, even though stock futures were limit down earlier in the day. By the end of the day, it was just another wild ride.
What's Going On
Here's how the market pros interpreted things as they unfolded.
"Right now the market's being driven by emotion," says David Lutz of Stifel Nicolaus Capital Markets. "The buyers seemed to be awaiting a tidal wave of sellers. They never showed up".
John O'Donoghue of Cowen & Co. says trading is being driven by "the fear of the unknown," adding that the traditional buying and selling of stocks based on value was "out the window."
James Awad, managing director of Zephyr Management, says "we've surpassed the 1973-74 situation", when stocks were engulfed in a brutal bear market and an oil crisis gripped the US economy.
"You're seeing a significant ratcheting down of expectations for worldwide economic prospects, which means earnings estimates have to come down dramatically," says Awad. "You're getting a huge margin call."
Dennis Gartman, editor of The Gartman Letter, says hedge funds continue to dump stocks, as they try to balance positions and look to raise new capital from lenders.
David Kotok of Cumberland Advisers predicted today would be the "peak of liquidation" for institutions and "will run its course very soon."
Pimco's Co-CEO Mohamed El-Erian noted the "big-force redemption's" started Thursday and says the "repricing" is nearing an end along with the "massive deleveraging."
El-Erian pointed to improvement in the credit markets with "a lot of policy actions coming on stream."