By Joyce Yu
Philadelphia, PA–Wall Street rebound Wednesday as fear eases. The Dow dipped on open before making a comeback with wild trading range of nearly 500 points. The VIX lingered around 30 points after hitting a more than two-and-a-half year high above 50 Tuesday.
“It’s over in terms of the severe down move we’ve seen, but reminds us that we’re kind of in an aftershock phase,” Rick Meckler, president of investment firm LibertyView Capital Management, told the Reuters.
Volatility, however, may not hit its peak yet, as history shows. U.S. equity market volatility, which is deeply informed by seasonality, sees most of its peaks around August and October, according to DataTrek Research. CBOE Volatility Index, the most popular fear gauge on Wall Street, has only peaked once in February since its 1990 inception. This year, midterm elections campaigns in the U.S will reach its climax in August and the market would be able to see the true effects of the recently passed tax reform package on consumer spending and business investment,” the agency noted in a report. “And it is also a typical month for peak volatility.”
“We are concerned there’ll be more volatility. I’d characterize what we’ve seen over the last year as abnormal,” said Sameer Samana, global equity and technical strategist at Wells Fargo Investment Institute in St. Louis. Even U.S. president Trump voiced out for the recent market decline. On Wednesday he dismissed recent market rout, saying stocks should not be falling amid strong economic news.
“The fundamentals in the United States look good but valuations are quite high in the equity space. The high valuation is going to be more of a challenge given rising rates,” said Stephen Wood, chief market strategist, North America for Russell Investments.
On individual stocks, Steve Wynn has stepped down as CEO of Wynn Resorts after allegations of sexual misconduct sent the company’s stock tumbling 18% since late January. Matt Maddox, currently the company’s president, has been appointed as the new CEO with immediate effect. Steve Wynn said in a statement that his current position won’t be “effective” under the “environment”:
“In the last couple of weeks, I have found myself the focus of an avalanche of negative publicity. As I have reflected upon the environment this has created — one in which a rush to judgment takes precedence over everything else, including the facts — I have reached the conclusion I cannot continue to be effective in my current roles,” he said.
