S&P 500's macro risk concerns intensify, investors increase downside protection positions

As the earnings season draws to a close, inflation, Federal Reserve policy uncertainty, and geopolitical tensions have become the focus of the market. Traders have increased their hedging positions against the overall volatility of the S&P 500, leading to an increased demand for index downside protection. Goldman Sachs is optimistic about anti divergence trading, which involves betting on an increase in S&P 500 index volatility while betting on a decrease in individual stock volatility. Investors are increasing downside protection to cope with potential larger fluctuations in the S&P 500 from August to September.