Several major trading teams on Wall Street had predicted for several weeks in a row that the stock market would pick up its upward trend after the U.S. mid-term elections. However, what happened on Thursday proved that they were completely wrong.
Trading teams from JPMorgan Chase, Castle Securities, and UBS Securities have previously stated that the mid-term elections are expected to be an event that will prompt the market to complete its correction ( clearing event ), alleviating the unease that has been plaguing the market before the voting. These trading teams believe that with a large amount of cash still on the sidelines waiting for an opportunity, investors will tend to re-establish their positions.
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Of course, the daily movement of the stock market is not sufficient to form a trend, and the bullish views of these trading teams may still come true in the end. However, the selling pressure on Thursday highlighted that even professionals on Wall Street face numerous pitfalls when trying to predict the direction of the stock market. U.S. stocks rose on Wednesday, but after Democrats swept both houses of Congress, concerns about AI transactions increased, causing the Nasdaq 100 index to lose $2.3 trillion in market value the following day, and the S&P 500 index to plummet by 4.4%, with all sectors closing in the red.
Goldman Sachs' head of equity execution services for the Americas, John Flood, stated that on Wednesday, Goldman Sachs' equity trading department experienced one of the busiest trading days of the year. "On Thursday, it was quite the opposite," he wrote in a report to clients on Thursday. "Our phones were almost blown up as everyone was asking about market conditions. Unfortunately, we didn't see much of anything significant."
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Flood indicates that those who were simply long have once again fallen into a wait-and-see attitude. Investors significantly reduced their risk exposure before the mid-term elections, but the rebound on Wednesday caught them off guard and prompted them to re-enter the market. Now, hedge funds are selling some of the stocks of those ultra-large cloud service providers they bought on the previous trading day.












