The strange plunge in US stocks! Wall Street calmly faces the "quietest" sell-off in history: trading volume plummets

According to the Zhitong Finance APP, on Monday, the S&P 500 index plummeted again, the dollar fell sharply, and gold prices soared to new highs, but Wall Street seemed unusually calm. Dave Lutz, a veteran of the U.S. stock market known for his market commentary, stated, "This is the calmest and most composed day I can remember for a 4% intraday drop. Stock and options trading volume is almost nonexistent."

Unlike earlier this month—such as on April 3 and 4, when the S&P 500 index dropped more than 10% after Trump announced comprehensive tariffs, or a week later when the S&P 500 index rose 9.5% after President Trump temporarily suspended tariffs—the atmosphere among investment professionals and fund managers seems quite calm, albeit a bit confused.

Brad Conger, Chief Investment Officer of Hirtle Callaghan, said, "Everything is now related to the economy, but no one knows what will or might happen. People are very afraid to make any big moves; it feels like being in a dark room with a lot of sharp glass on the floor, and the best thing to do is to stand still and hope the lights come back on."

Trump's latest pressure on Powell has reignited concerns about presidential interference in Federal Reserve policy. Since last week, a series of attacks from Trump has led people to question whether the Federal Reserve can maintain its political independence—an independence that is the cornerstone of confidence in the U.S. financial markets. Meanwhile, the latest data on the inflation indicators favored by the Federal Reserve remains above target levels.

Trump's contradictory trade policies continue to put pressure on the stock market. Since Trump announced significant tariffs on most U.S. trading partners (which were then suspended a week later), the S&P 500 index has cumulatively dropped 9%, down 16% from the historical high set in February. On Monday, all three major U.S. stock indices closed down more than 2%. All 11 sectors of the S&P 500 index fell, with consumer discretionary and information technology sectors leading the declines.

April 2025 is expected to become one of the most unstable periods on record since October 2008 and March 2020. However, unlike those times of global financial crises or pandemics, this time, Wall Street is shrouded in a disturbing calm—at least market sentiment indicators suggest so, despite the turbulent price movements.

The S&P 500 index has averaged a 2% fluctuation each week this year, while the long-term average is twice a month. The Chicago Board Options Exchange (Cboe) Volatility Index (VIX) is currently hovering around 35, a level that typically indicates the market is in distress. However, trading volume in April so far remains well below average, dropping from just over 20 billion shares to about 13.5 billion shares.

Elan Luger, Global Head of Risk Trading in JPMorgan's trading department, wrote in a report on Monday afternoon, "Our trading department is very quiet."

However, even as the S&P 500 index faces its worst month since September 2022, there are almost no signs of panic. Retail investors, in particular, continue to buy. According to data from Emma Wu, a global quantitative and derivatives strategist at JP Morgan, retail investors net purchased $2.2 billion in stocks as of Monday afternoon New York time, significantly above the average level of the past month.

Conger stated, "I don't feel any panic at all. This is just a strike by buyers. The current expected price-to-earnings ratio for the S&P 500 is about 20 times, while panic situations are more likely to be around 16 times."

However, things may soon become painful. Earnings season is about to reach its peak, the economic outlook is unclear, and companies are unable to act clearly. Investors are focused on prospects and capital expenditure plans rather than profits. Dave Mazza, CEO of Roundhill Financial, said, "There isn't much good news. Investors are not willing to take risks right now. The uncertainty of trade policies, combined with Trump's attacks on Powell, makes it difficult for an already shaky market to bear."