Tags: Stock | trading | drop | economy

Stock-Trading Volume Continues to Drop Amid Economic Fear

By    |   Tuesday, 08 May 2012 07:00 AM

The seven-month rally in the stock market hasn’t been enough to stanch a slide in trading volume amid continued concern about the economy.

In April, average daily trading volume for all U.S. exchanges totaled 6.5 billion shares, a 46 percent plunge from the 12.1 billion peak in 2008 prior to the financial crisis, according to Credit Suisse.

Typically, when the economy rebounds, stock trading volume rebounds.

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“My expectation was that we would see people go back to the stock market,” Charles Rotblut, vice president of the American Association of Individual Investors, tells The New York Times.

“It remains to be seen whether there will be a core group of people that is just turned off of the stock markets altogether.”

Many investors are worried that the tenuous economic recovery that began in July 2009 will peter out. Economic growth slipped to 2.2 percent in the first quarter from 3 percent in the prior three months, and some economists think the number will fall further this quarter.

“We can’t be certain as to when or whether the volume is going to recover,” Lee Shavel, chief financial officer at the Nasdaq OMX Group, tells The Times.

The turmoil in Europe certainly isn’t encouraging U.S. investors to dive back into stocks.

“There are still many hurdles in Europe,” Matt McCormick, a money manager at Bahl & Gaynor, tells Bloomberg. “People will take a renewed focus on Europe, and that focus is not positive.”

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Tuesday, 08 May 2012 07:00 AM
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