US stock markets experienced positive momentum, reflecting a solid bid throughout the day. This trend intensified after Powell addressed inflation concerns regarding tariffs, although profit-taking later led to a decline in the S&P 500.
The S&P 500 rose by 1.1%, gaining 61 points to close at 5675. Other indices also recorded gains, with the Nasdaq Composite up 1.4%, the DJIA increasing by 0.9%, and the Russell 2000 rising by 1.8%. The Toronto TSX Composite saw a 1.6% increase.
Late Day Sell Off
There were notable sell-offs in the final 10 minutes of trading on both Monday and the day in question, indicating potential derisking by hedge funds during peak liquidity times.
Powell’s comments on tariffs appeared to reassure investors, reducing some concerns around inflationary pressures. This contributed to a clear bid in equities, lifting most major indices higher throughout the day. However, a late-session reversal suggests that some market participants opted to lock in profits rather than chase gains.
The losses towards the close were not isolated to a single session. Monday saw a similar pattern, with selling pressure emerging in the final stretch of trading. This suggests that funds with larger exposures may have been adjusting risk at points of higher liquidity, likely using market-on-close orders. The repeated nature of this activity calls for attention, as it may reflect a strategic move rather than an incidental occurrence.
In derivatives markets, the price action indicates broader positioning dynamics at play. A steady bid through most of the session, followed by a sharp reversal, implies that options dealers may have contributed to the late-day pullback. If call-buying activity had been prevalent earlier in the day, hedging flows could have supported the rally, only to reverse as those positions unwound.
Sector Performance Trends
Sector performance aligned with these broader trends. Higher-beta stocks outperformed, with the Russell 2000 rising the most among major indices. The weight of small-cap performance underscores a greater risk appetite during the trading session, though short-term profit-taking dynamics later interrupted that optimism. The Nasdaq’s strength, relative to the Dow, further highlights how growth-oriented stocks benefited.
Considering the late-session selling, traders should be aware of positioning adjustments that may affect near-term volatility. If this pattern persists, it could indicate that risk is still being managed conservatively following recent gains. Additionally, Powell’s comments alleviated some immediate inflation concerns, but further tariff-related developments may sway sentiment in the sessions ahead.
