‘Freak out’ indicator soars to record with war sparking trader anxiety

Wall Street traders have been on edge, hanging on every development in the Middle East and the often unpredictable missives of President Donald Trump. One technical metric, the daily turnover in the State Street SPDR S&P 500 ETF Trust, has breached $60 billion — a reading seen as a “freak out” indicator by Bloomberg Intelligence strategists — 29 times this year. That new record compares to 28 times in all of 2025, according to BI’s Athanasios Psarofagis.

Volatility was on display again on Tuesday, when the S&P 500 Index first plunged 1.2% as Trump ratcheted up pressure on Tehran to reopen the Strait of Hormuz, then clawed back the losses to close slightly higher. Futures on the 500-member gauge soared 2.2% after the US and Iran agreed to a two-week ceasefire, giving markets at least some respite from the turbulence driven by the Middle East conflict.

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But while the ceasefire agreement is welcome news for traders on Wall Street at beyond, it may be too early to sound the all-clear on the market that’s been parsing every geopolitical headline for signs on how long the conflict will last, market observers say.

“A delay in attacks on Iranian civilian infrastructure and (at least) 2-week pause in military actions is a significant short-term positive for risk assets, if it holds,” said Stuart Kaiser, head of US equity trading strategy at Citigroup. “However, uncertainty around the details and durability is significant as both sides’ statements are contingent on the other’s behavior.”

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The gyrations appear to be taking a toll on some investors, with buying from the reliably-bullish retail crowd showing signs of flagging and hedge funds bailing out of global stocks at the fastest pace in more than a decade. Dip-buyers have pulled back as well: A BI study of leveraged long ETF flows showed investors were far less inclined to buy aggressively when stocks sold off in March.

“Every time there’s some bad news, the market freaks out much more than it used to just because it’s like, ‘OK, let’s take the money and run,’” BI’s Psarofagis said.

Of course, buying on weakness has been rewarded in recent years, with markets eventually bouncing to erase declines spurred by everything from the Covid-19 pandemic to the worst inflation scare in decades. Bullish investors argue that the US economy has so far been resilient, while advances in artificial intelligence offer a powerful reason to remain positive on stocks.

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Seasonality may also prove a tailwind: The S&P 500 has notched an average April gain of 1.5% since 1990, trailing only November’s 2.2% advance, data compiled by Bloomberg show. Last April turned out to be a significant dip-buying opportunity, with markets tumbling on tariff fears only to roar back in the following months.

Down days could provide “some interesting entry points,” Psarofagis said. “Last year during tariffs, that was a really great buying opportunity, if you wanted to stomach it.”