The Calm Of The Summer Is Over For Investors—Volatility Is On The Horizon
Summer vacation is officially over. Investors who expected the calm environment in the financial market to continue were shocked last week as stocks, bonds, oil and gold all fell Friday amid growing concerns regarding central bankers ability to prop up markets.
The S&P 500 tumbled 2.5% Friday, breaking the market stasis of the last 52 consecutive trading sessions where the broad stock index hadn’t fallen by more than 1%, the Wall Street Journal reports. On top of that, the CBOE Volatility Index stayed near multiyear lows throughout July and August, but jumped 40% Friday.
“There’s a growing sense that central banks have hit the wall,” says Gluskin Sheff & Associates chief economist and strategist David Rosenberg. “The bottom line is there’s more downside risk than upside potential for this market over the next few months.” [WSJ]