For only the second time this year, the New York Stock Exchange is invoking “Rule 48” to minimize the major sell off brewing on Monday August 24th. This gives NYSE specialists more room in making bid and ask prices so as to smooth the opening of trading. In most cases, Rule 48 will only be implemented when a trading session is anticipated to be particularly volatile. On Monday, the DJIA premarket was down almost 700 points.
Rule 48 allows market makers on the NYSE to not give out price indications ahead of the opening bell. This makes it much easier to actually open stocks on days when the stock market is moving down very quickly.
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
Of note, Rule 48 was implemented several times in 2008 and 2009 during the financial crisis.
Update on Black Monday Redux
It’s deja vu all over again. The first Black Monday stock market crash was October 19th, 1987 when the DJIA was down more than 500 points (an over 20% haircut). On Monday, August 24th, the DJIA was down over 1000 points right after the open, but that actually only represents around a 6% loss to the index. The S&P 500 was down over 100 points and the tech-heavy NASDAQ was down over 250 points immediately after the opening bell.
Of note, the volume on all exchanges is at historic levels and losers outnumber gainers over 10 to 1.
U.S. stock markets have bounced back a bit after the initial rout, and the DJIA is currently down around 600 points as of 9:53 AM ET Monday.
Black Monday 2 sell off sparked by rout in China stocks
Fears about continued economic growth in China, and worries about a “hard landing” spiraled out of control in Asia early Monday, as commodity prices also crashed in tandem with stock markets. China’s main stock market was down almost 9% at the end of trading. The fears then spread to European markets, most of which ended up losing close to 5% for the session.