October 22, 2020

The stock markets fear gauge surges 12% after President Trump tests positive for COVID-19

http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/SuHHRkG1mCc/vix-stock-market-fear-volatility-gauge-trump-positive-covid-test-2020-10
NYSE Trader blur
  • The Cboe Volatility Index – or VIX, which is often referred to as the stock market’s fear gauge – surged as much as 12% on Friday after President Donald Trump tested positive for COVID-19.
  • The increase came as risk markets plummeted globally and investors shifted cash into safe-haven assets.
  • Wall Street strategists previously warned that volatility would likely rise in the weeks before and after the presidential election. The positive test further fuels market uncertainty.
  • Watch the VIX update live here.

Wall Street’s preferred measure of future stock-market volatility surged on Friday after President Donald Trump announced he tested positive for COVID-19.

The Cboe Volatility index – or VIX, which is commonly referred to as the stock market’s fear gauge – leaped as much as 12% as┬ápremarket futures for major stock US indexes slumped. Investors around the world dumped risk assets and pivoted to safe havens in early Friday trading.

The positive test adds new uncertainties to the US presidential election just one month before Americans head to the polls. President Trump and First Lady Melania Trump, who also tested positive, began quarantining on Friday, fueling speculation that the next scheduled debate between the president and Vice President Joe Biden won’t take place. Trump will likely be forced to cancel several campaign rallies.

With Wall Street strategists already warning of heightened volatility in the weeks before and after election day, the early Friday news is set to keep markets even more chaotic over the next month.

Read more: Legendary trader Ed Seykota took a $5,000 client account and turned it into $15 million in 16 years. He shares the 5 trading rules that contributed to his gargantuan returns and continuing success.

To be sure, the intraday peak remained below the highs seen last week. The index soared throughout September as outsized selling of tech giants drove frothy price action.

The volatility metric uses pricing of S&P 500 options contracts to measure investor sentiments and forecasted market risk. When the magnitude of price swings increases, the VIX jumps higher.

The VIX hovered around 29 after hitting an intraday high of 29.90. A steady increase throughout September reversed a months-long downtrend for the index and held it at relatively high levels.

The VIX stood at 29.25 as of 9:15 a.m. ET on Friday.

Now read more markets coverage from Markets Insider and Business Insider:

Peter Mallouk built a $34 million RIA into a $50 billion giant. The wealth-management CEO pinpoints 3 opportunities his firm is implementing in client portfolios, and shares 2 tips on how to accumulate wealth.

Stock bullishness across Wall Street is back to pre-pandemic levels – and will likely spike even more after the US election, BofA says

Penn National will nosedive 57% as weak fundamentals overshadow ‘internet meme’ rally, Deutsche Bank says

VIX

Markets Insider