Rising U.S. Stock Trading Faces Russell Boost: Chart

U.S. stock trading, already poised for the busiest month in a year, may get another boost in volume today as Russell Investments concludes the annual revisions to its equity benchmark gauges.

The CHART OF THE DAY shows that U.S. trading volume is on track for the strongest month since May 2012, with approximately 7 billion shares changing hands on average each day in June, according to data compiled by Bloomberg. Russell’s annual revisions usually spur one of the busiest sessions of the year. Last year’s reconstitution on June 22 helped fuel a jump in volume to 9.73 billion shares, the highest total of the year.

“We expect the net trade is about $42 billion” solely from the Russell changes, Keefe, Bruyette & Woods Inc. analysts Melissa Roberts and Kelly Motta wrote in a research note this week. The revision to the indexes “is a liquidity opportunity, which may offer attractive exit and entry points for stocks with net recon buy and sell imbalances, respectively,” the analysts wrote. Much of the trading will occur in the last few minutes of today’s session, they wrote.

Trading in U.S. stocks is picking up from a four-year slowdown, after investors sold shares amid concern the Federal Reserve may start paring monetary stimulus this year. The Standard & Poor’s 500 Index has declined 3.4 percent from a record on May 21 and is down 1.1 percent in June, poised for the first monthly loss since October.

Russell’s global stock indexes, including the Russell 1000 Index and the Russell 2000 Index, are used as benchmarks for $4.1 trillion in assets, according to the company’s web site. In three of the previous four years, the reconstitution day ranked in the top 20 busiest trading sessions, data compiled by Bloomberg show.

Russell, a Seattle-based company owned by Northwestern Mutual Life Insurance Co., adds and subtracts companies from gauges and reclassifies companies as growth stocks, value stocks or blends of the two based on changes in their valuation, historic sales growth and projected earnings.

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