Here’s Why Markets Have Been Wildly Volatile

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Markets are getting crushed.

At the moment, the Dow Jones is down another 488 points.  The NASDAQ is down 400, as the S&P 500 slips 102.   All thanks to the same culprits – the Federal Reserve, sky high inflation, with the 10-year Treasury yield at its highest point since November 2018.

Plus, while the “Federal Reserve announced a 50-basis-point interest rate hike on Wednesday, the central bank’s efforts to combat rising inflation with more aggressive rate raises has also sparked concerns that this could potentially drag on economic growth,” said CNBC.

The other problem – if the Dow Jones breaks support dating back to late February 2022, it could fall to its next level of support around 31,000.  That’s another 1,900 points lower.  Here’s hoping that doesn’t happen, and that support holds.

Some of the only trades up today are the volatility trades we mentioned last week, including:

  • ProShares Ultra VIX Short-Term Futures ETF (UVXY) – which is up another $1.45.
  • iPath S&P 500 VIX Short-Term Futures (VXX) — which is up about 80 cents.
  • ProShares VIX Short-Term Futures ETF (VIXY) – which is up $1.11.

All as the “fear gauge,” or the VIX pops another 13.7% to 34.33.

Hopefully, we’ve seen the worst of the markets.  However, “There is a lot of uncertainty with what is going on, with inflation, oil, global macroeconomic events,” said Matthew Tym, head of equity derivatives trading at Cantor Fitzgerald, as quoted by Barron’s. “I think we are in for some volatility going forward, probably for the whole year.”