NEW YORK - Panic appears to have faded following last week's outbreak of volatility in U.S. stocks, but if history is any guide, markets might remain jittery for months.
"Once settles into a range, then people will get a little more passive again," said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade."But for six months to nine months, it usually shakes people up." Meanwhile, investors rushed to price in the chance of a U.S. slowdown following a spate of alarming economic data. The S&P 500 fell as much as 8.5% from July's records, just missing the 10% threshold commonly considered a correction. The index is still up 12% this year."What we saw on Monday was really isolated to the equity market and the FX market.
Nicholas Colas, co-founder of DataTrek Research, is watching whether the VIX can remain below its long-term average of 19.5 to determine whether calm is truly returning to markets.
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