Wall Street Fear Index Back in Double Digits as Stocks Falter

A measure of implied volatility rose on Monday, closing at a level not seen in two weeks as equities backtracked from record territory.

Fear Index Returns to Double Digits

The Chicago Board Options Exchange (CBOE) Volatility Index rose 7.1% to close at 10.33. That was the first time since Sept. 26 that the VIX closed in double digits.

Volatility has now increased in back-to-back sessions, rising more than 12% over that period.

The fear index has traded at uniquely low levels all year long as stocks shot up through the stratosphere on pro-growth optimism. A pullback in equities is usually accompanied by a rise in Vol, as evidenced by the market’s performance on Monday.

All of Wall Street’s major indexes finished in negative territory in early-week trade. The large-cap S&P 500 Index declined 0.2% to close at 2,544.73. Six of 11 sectors contributed to the declines, with healthcare stocks shedding 0.7%.

The CBOE VIX trades inversely with the S&P 500 Index roughly three-quarters of the time.

Trump Eyes Deal With Democrats Over Healthcare

Health stocks came under pressure after President Donald Trump said he was open to cutting a short-term deal with Democrats as a first step in reforming the nation’s healthcare system.  GOP infighting has prevented the Trump administration from tabling any meaningful reforms.

“If we made a temporary deal, I think it would be a great thing for people, but it’s really up to them,” Trump said this weekend, in reference to rival Democrats.

“So if we could do a one-year deal or two-year deal as a temporary measure, you’ll have block granting ultimately to the states, which is what Republicans want,” he added.

FOMC, Economic Data Eyed

Activity on Wall Street is expected to pick up in the coming days as investors eye the minutes of last month’s FOMC policy meeting. The official transcript could shed light on the Federal Reserve’s timetable for raising interest rates.

A pair of high-profile data sets will also make the rounds on Friday. The Labor Department’s consumer price index (CPI) will be released Friday at 8:30 a.m. ET. Separately, the Department of Commerce will issue its monthly retail sales report.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi