Stock market volatility is back as stocks slide on Fed rate hike fears
The Dow is now on pace for its fifth straight day of losses, falling more than 3% this week.
“There is more future volatility ahead,” said Bruce Monrad, portfolio manager of Northeast Investors Trust. “It should increase as the Fed starts to think about raising rates and once it starts tapering.”
These market gyrations could become more routine, which may alarm investors who have gotten used to more calm on Wall Street.
“Volatility has been very low because the market overall supported by improving earnings,” said Marco Pirondini, head of equity at Amundi US. “But there is always some speculation in other corners of the market.”
The VIX, which many investors refer to as Wall Street’s “fear gauge,” is now hovering around the pre-pandemic levels of February 2020. It’s been steadily declining since peaking in March of last year. The VIX has fallen nearly 15% in 2021.
But the VIX spiked more than 10% Friday morning, and some experts warn that the summer and latter half of 2021 could be a bit bumpier than the first six months of the year.
Schuringa said he’s concerned about the “speculative excess” in the meme stocks as well as in the tech sector and thinks that a broader market correction could be on the horizon.