The collapse in S&P 500 futures sparked market instability. We analyze the causes and consequences for investors.
Sudden Changes in S&P 500
At 4:40 AM ET, the S&P 500 futures market collapsed, erasing $600 billion in market cap in under two hours. By 6:20 AM, the market had tanked without warning but reversed course and turned green just as quickly.
Investor Reactions to Market Volatility
Despite expectations, the Swiss National Bank's actions did not explain the futures collapse. While hedge funds dump stocks and flock to gold and silver, retail investors continue to invest heavily in equities, creating a market with violent price swings.
Recovery and Economic Indicators
After the morning chaos, the market rebounded aided by strong economic data. Sales of previously owned homes rose by 4.2%, exceeding analyst expectations. Federal Reserve Chair Jerome Powell stated that the economy remains strong overall.
Despite the morning instability, the stock markets recovered due to positive economic data. However, investors remain vigilant for further changes.
