Would things be better if the equity markets were open for less than six and a half hours each day? U.S. Treasury Secretary Steven Mnuchin suggested such a change might lessen the pain in stocks, where major indices have fallen 30% from recent highs in less than a month, killing the 11-year-old bull market.
Mnuchin said the Trump administration intends to keep markets open, but said shortened trading hours may be needed at some point.
But investors weren’t buying it.
Chad Morganlander, senior portfolio manager at Washington Crossing Advisors, in Florham Park, New Jersey, said:
“Investors should feel as if the financial system is conducting business as usual.”
Even if the usual business involves days where the market falls more than 10%, it still gives investors some control over their portfolios. The longer the markets are open, the more time investors have to buy, sell, or do nothing. By shortening the trading day, investors would have to pack more decisions into a smaller window, which could make the markets more volatile.
The S&P 500 jumped 6% on Tuesday, rebounding from Monday’s nearly 12% drop, which was the worst one-day decline since 1987.
The last time the NYSE closed its doors due to an unforeseen circumstance was in 2012 after Hurricane Sandy battered New York City. After the Sept 11, 2001, attacks on the World Trade Center in New York and the Pentagon in Washington, D.C., the NYSE did not reopen until Sept 17, a day when the S&P 500 tumbled nearly 5%.
One place where shorter trading sessions might make sense is in the overnight futures markets. The S&P futures, known as E-minis trade all night, but often with little volume. Big swings in the overnight futures can give investors the wrong impression of what will happen the next day.