Worst hour of the day

The stretch between noon and 1 p.m. really shouldn't be so painful. Grab a sandwich and take a break, right? So why has Wall Street chosen this 60-minute block of time to make life so miserable for investors? In case you haven't heard, the Dow tumbled 281 points today, about 200 of that coming in the closing hour or so of the session. Actually, this last-hour craziness has been an equal opportunity trading pattern; Wednesday and Thursday saw huge swings the other way. Marketbeat explains that big institutions that do program trading are looking for late-day prices and thus put in their orders as close to the end of trading as possible. Those are huge trades, of course, and can make a big difference. Another possibility: an asset allocation out of bonds or stocks (obviously stocks today).

Erroneous trades have also been blamed, and, in the case of the upward moves, short-covering could be a factor. If some traders are slipping out early to a ball game or the beach, that could also alter dynamics. And of course, at least where those late rallies are concerned, some may just sense a chance to snap up some bargains. “It is encouraging to see buyers seemingly looking to take opportunities in the market later in the day rather than seeing the market activity dominated by traders reacting to newsflow, as tends to be the issue in early hours trading,” said Jack Caffrey, U.S. stock strategist at J.P. Morgan Private Bank.