JPMorgan Says Levered ETFs Set to Sell Billions Into Stock Close

Leveraged exchange-traded funds have more than $20 billion of US equity exposure to dispose of into Thursday’s close, according to JPMorgan Chase & Co., another twist in what’s poised to be the market’s worst day in almost five years.

The bank estimates that these types of products, which typically use derivatives to amplify the performance of their underlying exposure, have to sell about $5 billion every time the market declines 1% in order to rebalance. That means that with Thursday’s big drop in stock gauges – with the S&P 500 tumbling 4% and the Nasdaq 100 losing even more – ...