Despite the declining trading volume, traders are still betting on a major shakeup in the US stock market tonight

According to the Wisdom Financial APP, traders affected by stock market volatility are preparing to face more fluctuations in the coming trading days, with a focus on the US initial jobless claims report to be released on Thursday.

Stuart Kaiser, head of equity trading strategy at Citigroup in the United States, stated that the options market implies a 1.2% volatility in the S&P 500 index based on the cost of put and call options at parity. If this pricing remains unchanged, it will be consistent with the implied trends on August 14 (the next Consumer Price Index report release date) and August 29 (the second trading day after NVIDIA's earnings report).

In a report to clients, Kaiser wrote, "We are still surprised by the rapid spread of recession risks, with the Atlanta Fed model forecasting a 2.9% GDP for the US in the second quarter, making the data to be released on Thursday very important." He mentioned that the possibility of significant volatility "also reflects the rise in short-term implied volatility, which may not reflect clear event risks like macro risk dynamics."

Traders are focusing on the weekly initial jobless claims data to be released at 8:30 pm Beijing time on Thursday to look for clues on whether the labor market is further weakening. The employment report last Friday showed that the unemployment rate in July rose to its highest level in nearly three years.

After a general market sell-off, volatility has been at a high level, briefly pushing the S&P 500 index to the edge of a correction, dropping nearly 10% from the historical closing high set on July 16.

Although the S&P 500 index has since regained some lost ground, currently about 6% below its peak, traders are still betting that a weak labor market will lead the Federal Reserve to steadily cut interest rates by nearly 50 basis points in September. However, traders seem to have cashed in on some of the futures and options bets for a significant rate cut this year midweek.

According to a survey of economists, after experiencing the largest increase in nearly a year, it is expected that initial jobless claims will decrease by 9,000 to 240,000 people in the week ending August 3. Most of the growth in the previous week was related to annual auto plant shutdowns and Hurricane Beryl, with an increase in applicants from Texas, the primary victim of the first major hurricane this quarter.

However, if the data rises again, it may reignite concerns that after implementing one of the most destructive monetary tightening policies in recent years to combat inflation, the Federal Reserve needs to shift its focus to the employment part of its dual mandate.

Kaiser added, "As US economic data slows, the possibility of a recession increases. But the information received last week does not seem negative enough to prove that the change in market sentiment is justified."