Market Extra: Kavanaugh hearing may ‘grind down’ stock market to half its average volume, strategist says

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Call it the “Kavanaugh effect.” Some stock-market analysts are warning that action on Wall Street could grind to a halt during the hotly anticipated hearing of Supreme Court nominee Brett Kavanaugh on Thursday.

The event is setting up to be high drama and “must-see TV,” even for traders and other market participants, declared Art Hogan, chief market strategist at B. Riley FBR Inc.

“We will likely see trading grind down to a pace that is less than half of the average daily volume,” Hogan said.

The veteran analyst said similar dips in attention have briefly occurred during “World Cup finals games, big tennis matches, NCAA March Madness,” and he views the hearing in that same league.

Kavanaugh is set to appear before the Senate Judiciary Committee at 10 a.m. Eastern Time Thursday to face allegations that he pinned Christine Blasey Ford to a bed, groped her and tried to remove her clothing when they were both in high school more than three decades ago.

The hearing, which is expected to be public and televised, has the potential to be a massive spectacle, with Ford expected to be testify.

To be sure, a hearing for a Supreme Court nominee isn’t typically a market moving matter and it may not even hurt trading action on Wall Street by day’s end.

For example, total composite trading volume on June 8, 2017, the day that former Federal Bureau of Investigation Director James Comey testified on Capitol Hill, was about 7 billion shares, compared with an average daily volume of 6.6 billion shares, according to Dow Jones Market Data.

During that June 2017 session, the Dow Jones Industrial Average DJIA, -0.40% the S&P 500 index SPX, -0.33% both finished slightly higher, and the Nasdaq Composite Index COMP, -0.21% managed to eke out a closing record.

“Truth be told, although the Kavanaugh hearing has attracted a lot of chatter and speculation, whether he is confirmed or not is unlikely to have a lasting impact on the economy or the stock market; it’s not really business news,” said Colin Cieszynski, chief market strategist at SIA Wealth Management based in Toronto.

Read: A first-ever Fed September interest-rate hike could set stocks reeling Wednesday

He expects that market participants to have the Kavanaugh hearing running in the background. “The hearing is something people are likely to have on in the background and may watch for the first 10-15 minutes then start drifting back to work, similar to last year’s testimony from former FBI Director Comey,” Cieszynski said.

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The hearing follows the Federal Reserve’s closely watched interest-rate decision, revised forecasts and a news conference by Chairman Jerome Powell on Wednesday, which is likely to keep a wrap on volume as stocks hover near records. Investors often pause ahead of key policy moves.

Also read: The Powell Fed can make history if it can slow the economy without crashing it

“What an awful week for trading. The first two days were so boring due to waiting for the Fed and now we have Kavanaugh on Thursday and no one does anything on Fridays anyway,” lamented Michael Antonelli, a trader for R.W. Baird & Co.