The large investors are prepared to deal with the situation where the summer stock market crash continues into the fall. They are worried that after the chaos caused by concerns about the US economic downturn and the Japanese central bank catching currency speculators off guard, a bigger wave of selling will appear.

Crowded stock and forex trading cause price drops, volatility and hedge fund selling, and this sudden reversal has subsided, with global stock markets rising nearly 2% so far this week.

Asset management companies that manage investments worth tens of billions of dollars said they are more likely to continue selling stocks than buying them as signs of weakness in the US job market and global consumer trends lower the threshold for market aftershocks.

Investors usually bet on recovery to deal with selling, but the mentality of buying on dips has been replaced by fear.

"This is not just a large financial market accident, we may also describe last week's events as a large financial market accident with a wider impact," Mahmood Pradhan, global macroeconomic head of Amundi's research division, and former deputy director of the International Monetary Fund, the largest fund management company in Europe, said.

He expected investors to remain cautious. According to data from Bank of America, investors have cut their stock positions and are increasingly turning to cash.

Michael Kelly, head of multi-asset management at Matsukawa Investments, is one of the people who has reduced his fund's stock market position. The company manages about $170 billion in client funds.

"The situation will be very, very unstable for the next two months," he said. He added that he expected the US to cut interest rates next month for the first time, but it may be too late to save the economy.

Investor expectations for global growth have fallen to an eight-month low.

The sell-off is not over yet.

Weak US employment reports and Japan's surprise rate hikes led to global stock selling, with volatility-linked and trend-tracking hedge funds exiting and anxious investors pouring into the government bond market.

Japan's rate hike has made profiting trading of tens of billions of dollars worthless, as speculators borrow low-cost yen to buy high-yield assets such as US tech stocks.

JPMorgan estimates that about 70% of the arbitrage trading has been closed out. But it's hard to measure the flow of funds tied to yen-related positions, Pradhan said, and the possibility of further closing out makes people very averse to risk.

Gerry Fowler, head of European stock strategy at UBS Group, said the hedge fund sell-off may be over, but mainstream investment managers who act more slowly usually take four to six weeks to adjust their portfolios.

Marie de Leyssac, multi-asset portfolio manager at Edmond de Rothschild Investment Partners, said these fund managers may be the next sellers, but she will decide whether to sell based on economic data.

Although she does not believe that the US economy is likely to slow down significantly, she has not bought stocks, but prefers put options that pay out in market declines, thus avoiding stock losses.

Scott Rubner, a Goldman Sachs strategist, said that pension funds will further reduce stock exposures and turn to fixed income, adding that the second half of September is the worst-performing period for Wall Street since 1950.

Market volatility.

Paul Eitelman, chief US investment strategist at Russell Investments, said that if the US employment report were to weaken again, there could be new volatility.

Federal Reserve Chairman Powell's speech at next week's Jackson Hole central bank annual meeting and the earnings report from AI giant Nvidia on August 28 are other market risk events.

Bardis Asset Management Senior Multi-Asset Strategist Arun Sai said, "Even if you think fundamentally this is reasonable, the volatility makes it difficult to increase exposure."

Fund managers' risk commissions often prevent them from buying stocks during significant stock price fluctuations.

The VIX index, which measures the expected volatility of the Wall Street S&P 500 index and European counterparts, hit a multi-year high last week before retreating, but related indexes continue to issue warning signals.

Another options market indicator, the VIX, has risen above the 100 mark in trading as expected volatility itself fluctuates, indicating that the market frenzy is not yet over.

"You should pay attention to it before you see the VIX index drop below 100. This is currently a key indicator," said Stuart Kaiser, Citigroup's stock trading strategy director.