Here’s Why Investors Are Dialing Down Market Exposure
During the month of September, The Standard & Poor’s 500 Index traded at record levels, gaining 2.97 percent, while the Dow Jones Industrial Average rose 2.2 percent and the Nasdaq added 5.1 percent. The S&P 500 soared to all time high of $1,729.44 on September 18, closing up 1.22 percent at 1,725.52. Similarly, the Nasdaq rallied 37.94 points, or 1.01 percent, to finish at 3,783.64, and the Dow Jones Industrial Average set a new intraday-high of 15,709.58.
That day, the Federal Reserve announced it would continue buying bonds at the current rate of $85-billion per month. Wall Street analysts and traders expected that the central bank would cut its asset purchases by $10 to $15 billion, and so the news that the central bank would continue to further increase the money supply, which makes borrowing easier, sent equities soaring. But still, TD Ameritrade’s reading of its Investor Movement Index for the month of September, showed that the firm’s clients dialed back equity market exposure.
“Once again it seems our clients anticipated market moves and repositioned their equity market exposure accordingly,” Nicole Sherrod, managing director of TD Ameritrade’s Trader Group, said in Ameritrade’s press release. “Over the last few months investors have continued a pattern of advancing exposure on market dips and rolling back exposure when equity markets reached record levels. Clients seemed to anticipate a rally and built up positions in August. As the S&P 500 traded at record levels in September, clients reduced their equity exposure and were net sellers of equities,” noted the release.