Wall Street Gets ‘Seasick’ on Hair-Trigger Swings: Traders React

(Bloomberg) -- From Meta Platforms Inc. to Microsoft Corp. to the ARK Innovation ETF and the whole sprawling market, stock prices are darting around with a velocity that would try the formidable nerves of a crypto bull. It's making life miserable for traders trying to navigate everything from evolving monetary policy to inflation-riven earnings and a pandemic.

More than in crypto, however, the swings in equities represent changes in very large sums of money. Amazon.com Inc.'s 19% swing added $270 billion to its value in minutes. Meta famously lost $251 billion for the biggest single-day wipeout in stock-market history. Companies in the Nasdaq 100 Index would have erased roughly $270 billion in value as the Invesco QQQ Trust Series 1, which tracks the index, sank 1.6% instantly after the jobs report.

Here are seven Wall Street pros on what it's like and what it means:

Joseph Saluzzi, co-head of equity trading at Themis Trading LLC.

“You can say that the pre- and post-markets equity markets make the crypto markets look calm. During the trading day, things have been relatively normal. It's the pre- and postmarket action that has been extremely volatile,” he said, adding that he's getting ‘seasick' from the volatility.

Steve Chiavarone, portfolio manager and head of multi-asset solutions at Federated Hermes:

“The market is trying to figure out if the Fed's hawkish move here will lead to a soft landing or the pull-forward of recession risk. And with growth trading at a 30x forward P/E, rising rates represent a real downside risk. So investors are in a shoot first, ask questions later.”

Dave Lutz, managing director at Jonestrading:

“A combo of Christine's ‘Powell Moment' (ECB Hawkish), a total curve-ball in NFP, and some massive earnings moves are making this week feel as long as a month for many traders.”

Sebastien Galy, senior macro strategist at Nordea Investment Funds:

“Big Tech is a dream best expressed in the film Tomorrowland, a fantastical future led by the greatest minds. It is, however, just a film not reality and when earnings show disappointing growth and guidance for Spotify and Meta, the edges of thus narrative start to become undone. This is the risk we had worried for year-end as liquidity is retrieved all over the world, leaving dreams on the shore of reality. The question going forward is how an irrational belief about the long-term future can sail through troubled waters.”

Seema Shah, Chief Strategist, Principal Global Investors:

“If there was any nervousness within the Fed about their hawkish pivot, today's jobs number will have disintegrated it. In recent days, fears around the omicron impact had prompted several analysts to call for a negative payroll number -- imagine what it would have been without omicron!” she said. “Equity markets may not respond positively to today's report. The case for near-term tightening has just been further reinforced and, inevitably, there will be speculation around a potential 50bps move in March. Yet, investors should really find comfort in the report. The economy is still hot and is strong enough to digest the policy tightening this year. Enough with the R-word whispers.”

Paul Nolte, portfolio manager at Kingsview Investment Management:

“Actually, for us, this week has actually been pretty good because we have been anticipating this shift to value away from growth and to other parts of the market. We have shortened up our duration over the last six months or so, anticipating that the Fed was going to be raising rates, going to need to raise rates. So for us, at least on a relative basis, we're actually doing very well this last week, the last two weeks.”

Max Gokhman, chief investment officer at AlphaTrAI:

“This roller coaster is definitely not for the faint of heart, but to me it's the intraday reversals that haven't been driven by anything immediately apparent that have been the most nauseating. When there's a catalyst whether NFP or FB at least you can prepare. This is where the AI comes in handy since it finds patterns where we just see jarring noise.”