Liquidity Remains A Concern in Wild Markets
February 02 2021 - 10:35AM
Dow Jones News
By Gunjan Banerji
The stock market has sharply rebounded to start the week, but
analysts are warning that the market remains prone to sudden
shocks.
Liquidity--which measures how easy it is to buy or sell
different assets--in S&P 500 futures has deteriorated to
historically low levels over the past week, according to Bank of
America analysts.
"Our short-term forecasting model for detecting U.S. equity
market fragility has reached its highest level since [March 2020]
as S&P 500 futures liquidity has declined to near historic lows
amid the recent speculative frenzy," the analysts wrote. "Failing
trading liquidity has been among the best predictors of sudden
market shocks."
This item is part of a Wall Street Journal live coverage event.
The full stream can be found by searching P/WSJL (WSJ Live
Coverage).
(END) Dow Jones Newswires
February 02, 2021 10:20 ET (15:20 GMT)
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