When the market break time arrived, everyone heaved a sigh of relief, although this respite would only last for an hour.
At the Morgan Stanley headquarters in the World Trade Center, the trading floor was deathly silent, with even those who ventured out moving quietly, afraid to make a sound. Sargent, the head of the trading department, had a long face as he stared intently at the final numbers on the screen, feeling at a loss.
The thousands of long positions he held had already incurred a loss of several hundred million dollars, a figure far beyond his authority. With no choice, he had to report to the managing director. At this point, Morgan Stanley had to consider the settlement for the next day.
Jim, the managing director in charge of the derivatives department, also wore a worried expression, pacing back and forth in his spacious office. After a while, he seemed to have made up his mind and asked Sargent in a grave voice, "What do you think will happen this afternoon?"
Within Morgan Stanley, there were also factional struggles. The investment banking department and the sales and trading department had always been at odds, with the leaders of both factions engaging in open and covert battles. However, these two departments were the most profitable, and the top management viewed this competition with a certain degree of approval.
However, if the trading department incurred such a huge loss this time, it would undoubtedly lose face in front of the investment banking department, a scenario that Jim could easily envision.
The current situation was that Morgan Stanley had shorted a portion of the stock market, but the profits were far from enough to offset the losses in the futures market.
"I think there will be a powerful figure speaking up, perhaps even the President. This is clearly a replay of the 1929 stock market crash!" Sargent lowered his head, thinking for a moment, and said somewhat uncertainly.
"What if there isn't?" Jim frowned, his tone filled with doubt.
"Foreign funds won't just watch their money disappear, will they? And there are so many listed companies; they won't ignore the plunge in their stock prices either! I think they will quickly announce stock buyback plans!" Sargent, at this point, was only thinking about how to recover all the losses, and his words were somewhat incoherent.
His predictions would soon come true. Just a few minutes later, about hundreds of listed companies announced stock buyback plans, which indeed injected a strong dose of confidence into the capital market.
"Our positions are just too large; I don't know how to unwind them!" Jim sighed, looking somewhat dejected. "Just do as you suggested. If we go down, it must be the will of God!"
At the same time, a few streets away at the Goldman Sachs headquarters, the trading floor was in a state of jubilation. The young traders were throwing their senior partner, Ed, into the air.
"We made about three hundred million dollars!" A disheveled trader shouted wildly, his voice immediately triggering another round of thunderous cheers from the traders.
"Good job, guys!" Ed, who had just come down from the air, took a deep breath and waved his hand at everyone. "Keep it up this afternoon, and everyone will get a hefty bonus at the end of the year!"
His words were met with another round of cheers.
These two starkly different scenes were playing out among every market participant. Whether on the East Coast or the West Coast, whether it was public funds or private hedge funds, whether it was the Federal Reserve Chairman Alan Greenspan or an ordinary citizen who had invested a few thousand dollars in the stock market, everyone was on edge due to the volatility in the capital market.
This was no longer just an issue for investors but a major event that could potentially affect the entire American economy, and even the world economy.
Even in the major countries of South America, including Brazil and Mexico, the capital markets were also hit hard, unable to remain unaffected.
The saying "a single hair can trigger a chain reaction" was the best description of the situation!
In Hong Kong, Zhong Shi looked drowsy, his head drooping as he dozed off. The Liao family father and son, and Andrew, looked at him with incredulous eyes, none of them daring to disturb him.
As the stock market and futures market plummeted, Zhong Shi's short positions kept making profits. In just three hours, he had earned nearly three hundred million dollars. With the funds already in his account, he now had over four hundred million dollars. Four hundred million dollars, which was three billion Hong Kong dollars, left the three of them speechless.
At this time, Li Ka-shing and his two listed companies had a market value of only a few billion dollars. With Li's holdings, his net worth was only a few billion dollars.
Did this mean that Zhong Shi's net worth was equivalent to what others had to struggle for their entire lives?
"Huh? Is it over?" Zhong Shi suddenly felt the surroundings become quiet in his sleep, which made him very uncomfortable, and he instantly woke up. After a moment of confusion, he remembered it was "Black Monday."
"It's not over, it's the lunch break!" Andrew respectfully replied. The "lunch" he referred to was the U.S. time, which was midnight in Hong Kong.
"Oh, I see. How's the futures market?" Zhong Shi tilted his head, thinking for a moment, and realized there was still a second half.
"Down sharply. Your account now has over four hundred million dollars. Do you want to unwind some positions?" Liao Xiaohua quickly answered, truly witnessing the immense power of these highly leveraged investment tools.
"Let's see. We'll wait until the end of the day." Zhong Shi blinked and said expressionlessly, as if the four hundred million dollars were a trivial number.
"Alright, alright!" This time, Liao Chengde finally got a chance to speak, but his expression was blank, as if he didn't know what to say.
The group hastily ate something and continued to wait for the afternoon session in the U.S.
At 1 PM U.S. time, the stock market resumed trading.
At this point, the trading floor was filled with a large number of sell orders, waiting for buyers. There were also announcements of stock buybacks by listed companies, which indeed boosted investor confidence, curbing the selling frenzy. The index began to rise slowly, and everything seemed to be improving.
This situation was undoubtedly the most challenging for professional brokers, as they held a large number of sell orders. If they couldn't find buyers, they would have to hold them, which would severely impact their liquidity.
The U.S. stock market operates under a market maker system, where professional brokers are the dominant force, unlike in modern China. It is because of these professional brokers that investors can go long or short on stocks, keeping stock prices at a reasonable level.
Currently, the brokers held a large number of sell orders, and with the uncertain afternoon trend, no investors were aggressively shorting to profit from the spread. Moreover, with their financial resources, it was difficult to challenge the selling pressure.
Ten minutes after the opening, a terrifying rumor began to spread on Wall Street. People were passing around the news that SEC Chairman David Ruder was speaking in Washington, D.C., hinting at the possibility of closing the stock exchanges.
This news immediately caused a huge panic. If the exchanges were to close, the stocks held by the brokers would become worthless, and their liquidity would be severely impacted. When it came time to settle, they would either go bankrupt or be taken over by others.
This time, it was the brokers' turn to go wild!
Sell! Sell like there's no tomorrow! Sell regardless of the cost!
No one verified the authenticity of the news; everyone had become like frightened birds!
The Dow Jones Index, which had just started to recover, turned red again and continued to plummet. A large number of sell orders appeared, and the short sellers saw an opportunity, lending stocks to brokers to sell, further exacerbating the market's burden.
In the futures market, the decline was even more severe, always a few points more than the Dow, as if everyone had lost confidence overnight.
Zhong Shi's account saw a rapid increase in profits! The gains were increasing almost every second, quickly surpassing the five hundred million and six hundred million dollar marks!
By 2 PM, this trend was finally halted. A Federal Reserve official publicly clarified that the Fed Chairman had not mentioned closing the stock market, which stopped the rumors. However, it was too late; the Dow Jones Index had already fallen to around 1600.
"This is an opportunity!" Zhong Shi jumped up and shouted. Although he didn't know what was happening in the U.S., he knew that the Dow Jones Index would close at 1738 points, not the current 1600 points. "Close all positions as soon as possible!"
Andrew, a diligent broker, didn't ask why and immediately connected with the Chicago side. On the other side of the ocean, Louis was taken aback but quickly entered the order on his computer.
Over ten thousand sell orders appeared on the market, and they were quickly filled at extremely low prices. By the time the transaction was completed, many people were still in shock, and Zhong Shi had closed all his positions, leaving over six hundred million dollars in his account.
This was the most severe decline of the day, with the S&P 500 Index falling over 30%, even more than the Dow Jones Index. The appearance of these buy orders was a signal that the bulls were about to counterattack.
"Buy as many long positions as possible within the position limits!" After the transaction was completed, Zhong Shi gave another order that left Andrew somewhat at a loss.
Fortunately, Andrew was professional and didn't ask why, continuing to give trading instructions to Louis on the other side of the ocean.
Another ten thousand buy orders appeared on the market, and they were easily filled, as there were too many short positions at extremely low prices, making it easy for the bulls to open positions.
At this point, the Fed's clarification began to take effect, and both speculative and buyback funds entered the market, sweeping up the low-priced stocks. Investors, regaining their composure, began to tentatively buy stocks. Under these multiple drivers, the Dow Jones Index began to rise.
This situation quickly spread to the futures market in Chicago, where futures investors, who are the most sensitive to market changes, began to withdraw their short positions and start buying. This, in turn, fed back to New York, and the two markets began to warm up.
Soon, the Dow Jones Index began to rise strongly, breaking through one resistance level after another amid the cheers of the crowd. Even at 2000 points, it paused only briefly before surging past.
As the Dow Jones Index broke through 2000 points, the traders and investors, who had been terrified, began to shout loudly, releasing all the panic they had endured. Many were in tears, overwhelmed by the emotions. This might be something they would never experience in their lifetimes! (Special thanks to reader 130412220253435 for the tip and review, thank you for your support!)
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