To the surprise of almost no one who would have paid a moment’s attention to the goings-on of Wall Street Monday, when the Dow industrial average followed global indices lower on the open, skidded back below the 10,000-point mark for the first time in four years, lost as much as 800 points intraday only to cut its steepest losses in half by the close to finish off 370 points at 9955: there was a lot of volatility in the equities market Monday. In fact, according to the CBOE volatility index, there was an unprecedented amount of volatility in this market, as the VIX surged to an intraday record at just over 56 points, a jump of 25% in the session. The persistent intractability of the credit markets has exacerbated concerns about the weakness in the broad economy, while bailout efforts in Europe have heightened concerns that the financial system there might actually prove to be weaker than the banking system in the U.S. Meanwhile, there’s little chance we’ll see the Volatility Index back off sharply in upcoming sessions. While the intraday reversal that cut stock losses in half is welcome from the perspective of anybody who doesn’t like to see their retirement account fall off the table, it hardly represented the kind of capitulation that typically would mark the bottom of a selloff.
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