It was another ugly day (S&P -224bps closing @ 5,275 w/ a of MOC $1.5b to BUY. NDX -304bps @ 18,257, R2K -89bps @ 1,876 and Dow -173bps @ 39,669) though volumes are evaporating and a far cry from last week's records as everyone has severe headline whiplash, and most are simply too tired to (over)trade (15.7bn shares traded across all US equity exchanges vs ytd daily avg of 16.4bn shares and over 30bn last week).
For those who missed it, stocks closed sharply lower on a combination of 1) Semis under pressure (NVDA -7% on new export curbs to China, which the company said will lead to a $5.5bn write-down + ASML -5% on earnings miss and lighter guidance as China frontloaded chip orders) and 2) Powell afternoon commentary reading fairly hawkish with his conclusion citing "for the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance." From Goldman trader Will Marshall: his comments keep the approach a reactive rather than proactive one given the tension between the sides of the mandate, with the bar to cutting either on a benign form of policy clarity or sufficient evidence of labor market weakness. And to think Powell had zero problems to cut not 25bps but 50bps back in September when 5Y5Y inflation swaps were much higher and when financial conditions were exponentially looser. Amazing what a presidential election in 3 months will do to an impartial Fed chief's motivation.
In any case, as Goldman's Mike Washington writes, there has been no real pickup in activity despite the moves, with S&P volumes drying up for shortened holiday week, -38% today vs. 10d average even as liquidity remains abysmal (S&P top of book at just $2.94mm)
