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That Escalated Quickly

I mean, last week’s stock rout really got out of hand fast.
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Wasn’t this fun?

The Dow Jones Industrial Average fell more than 1,400 points over five days, a 5.7% decline that marked the blue-chip index’s biggest weekly percentage loss since January 2016…. While signs of growth persist, increasingly restrictive trade policies threaten to disrupt a global economic recovery that had helped lift major indexes from New York to Hong Kong to multiyear highs in January. And growing backlash over how technology firms handle their users’ data has driven some of the most popular names in the sector lower.

The S&P 500’s financial sector tumbled 3% on Friday, the steepest decline out of its 11 sectors. An index of bank shares, the KBW Nasdaq Bank Index, fell 8% last week, eclipsing the 7.9% decline for the S&P 500′s tech sector…. The tumble in bank shares is notable, analysts say, because it illustrates fears about the Fed’s policy tightening and the prospects for economic growth.

We can all have a good laugh about it now, because Steve Mnuchin says he has a pretty good feeling his boss won’t plunge the world into a trade war, and because Mark Zuckerberg assures us that there are plenty of other Cambridge Analytica scandals out there, so we should assume that they’re already priced in. Plus, President Trump might have actually secured a more favorable deal with a partner that accounts for a whopping 3% of U.S. trade, and he hasn’t imposed a naval blockade on the European Union yet. And for those inclined towards schadenfreude and the belief in the innate specialness of human head meat, there’s a chuckle to be had at the expense of those dumb computers.

Among those making heavy bets on technology stocks during the sector’s worst week in nearly eight years were quant funds.

As of Wednesday, firms that use technology and formulas to automate the investment process had their highest gross exposure to the sector on record, according to Credit Suisse Group AG prime services data going back to 2013.

Plus, you know, the terrible, horrible, no-good, very bad week did have its winners, even in the benighted tech sector.

Dropbox Inc. defied a plunging stock market and a hazardous backdrop for technology companies, pricing its IPO above expectations an hour after a 724-point selloff and then watching its shares rocket sharply higher on their first trading day…. The company’s 36% first-day jump tied it with PagSeguro Digital Ltd. as the second-biggest pop this year among tech IPOs behind Zscaler Inc., whose shares more than doubled on their first day of trading, according to Dealogic….

The early success of Dropbox is a sign of investors’ thirst for a big-name tech IPO with solid growth prospects, as Dropbox is one of the few highly valued private tech companies to debut in recent years.

U.S. Stocks End Worst Week in Years [WSJ]
Bank Stocks Had a Rough Week, Too [WSJ]
U.S. Stocks Rally as Trade Worries Ease [WSJ]
U.S., China Quietly Seek Trade Solutions After Days of Loud Threats [WSJ]
Quants’ Footprint in Tech Hit Record Just as Selloff Accelerated [Bloomberg]
Dropbox IPO Defies Market’s Gravity With 36% Jump [WSJ]


That's Some Latency

BATS apparently reeeaally wanted those first few trades to be practice trades. This is amazing: Bats Global Markets Inc., the six- year-old equity exchange, canceled its initial public offering, stunning Wall Street after errors on its own computer systems derailed trading in the stock and forced a halt in Apple Inc. (AAPL) “We believe withdrawing the IPO is the appropriate action to take for our company and our shareholders,” Joe Ratterman, the chief executive officer, said in a statement. Asked if that meant Bats is no longer going public, Randy Williams, a company spokesman, replied by e-mail, “Yes, that’s correct.” It's nice to see Bloomberg as incredulous as I am - that paragraph means: the CEO said "we are withdrawing our IPO" and Bloomberg emailed to ask "wait, no, REALLY?" And got the response, "yes, really." Because what's weird here is not a withdrawn IPO but a withdrawn IPO that had already priced. And opened for trading - for a few seconds anyway - to print a few trades at $15.25 (down from last night's IPO price of $16) at around 10:45 this morning before halting, unwinding those trades and ultimately unwinding the IPO.

(Getty Images)

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