Arizona Daily Star- If you’re baffled by Wall Street’s performance last week, consider the increasing influence hedge funds have in manipulating the market.
Investors spent another anxiety-ridden week watching last-minute, triple-digit swings in the Dow Jones industrials, driven in part by worries about credit drying up and further subprime mortgage losses. But, while it looks like the market gyrates solely on fears about credit issues, market watchers say it is more complicated than that.
The Dow’s 104-point drop in the final 15 minutes of Friday’s session clearly had its roots in fundamental issues  comments from Bear Stearns Cos. executives that reignited fears of a widening credit crunch. But that drop, the 150-point sprint higher in the last 20 minutes of trading on Wednesday and a similar 100-point advance on Tuesday, might also have technical reasons behind them.
Hedge fund managers have been making bets on how far down or up the market will move on a given day by making sophisticated “short” and “call” investments. But the market hasn’t always cooperated  going in the opposite direction from what hedge funds have expected and leaving them to scramble at the day’s end to cover positions by buying or selling stocks.
Hedge funds now account for half the daily volume on the New York Stock Exchange, with average volume last week running about 2 billion shares.
