U.S. Bull Run Losing Fans As Traders Load Up On S&P 500 Hedges
By Sofia Horta E Costa and Oliver Renick
With rallies in U.S. stocks falling apart on a daily basis, one measure of trader anxiety in the options market is flashing more pessimism than any time in six years.
Bearish puts on the Standard & Poor?s 500 Index outnumber bullish calls by the most since October 2008, with the ratio steepening amid a run of economic reports that trailed analyst forecasts, data compiled by Bloomberg show. Sentiment is deteriorating amid a stretch of volatility that has seen the benchmark gauge for U.S. equities erase annual gains six separate times in 2015.
With economic data missing the mark, analysts predicting three straight quarters of falling profits and speculation shifting about when the Federal Reserve will boost interest rates, investors are taking steps to protect profits after a six-year bull market added $16.5 trillion to stocks. A private report on Wednesday showed the smallest job additions in more than a year.
?People have a lot of gains over the last few years that they need to protect,? David Negri, an equity futures and options trader at Timber Hill LLC in Greenwich, Connecticut, said by phone. ?There are a lot of cross-winds right now.?
Stocks are falling as economic data are missing forecasts by the most in six years, according to the Bloomberg ECO US Surprise Index. Employment climbed 189,000 last month, the smallest gain since January 2014, after a revised 214,000 rise in February, figures from the ADP Research Institute in Roseland, New Jersey, showed Wednesday.
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