Aug. 25 (Bloomberg) -- U.S. stock price swings are widening
at the fastest rate since the 1987 crash as concern the economy
is stalling and optimism the Federal Reserve will try to spur
growth whipsaw investors.
The CHART OF THE DAY shows a measure known as three-month
historical volatility for the Standard & Poor’s 500 Index jumped
119 percent between July 22 and Aug. 23, the biggest rise over
the same amount of time in almost 24 years, according to data
compiled by Bloomberg. Excluding that year, the current increase
is the biggest in at least four decades.
“We’re going to remember these times for the rest of our
lives,” Brenna Hardman, a derivatives broker at MEB Options
LLC, said in a phone interview yesterday from the Chicago Board
Options Exchange. “People are scared. And I’d say bars around
here are seeing their bottom lines increase. I’ve never spent
such long days on the floor, and you don’t see anyone walking
down here smiling very big.”
The Dow Jones Industrial Average rallied or declined 400
points on four straight days this month, the longest streak
ever, as S&P’s reduction of the U.S. government’s credit rating
fueled concern the economy will falter. Harvard University
economics professor Martin Feldstein, a member of the National
Bureau of Economic Research that measures recessions, said this
month that the odds of a contraction are 50 percent.
Investors are awaiting Fed Chairman Ben S. Bernanke’s
speech in Jackson Hole, Wyoming, tomorrow for signs of whether
the central bank will introduce another program to boost the
world’s largest economy. During last year’s conference in
Jackson Hole, he signaled a second round of asset purchases,
known as QE2, that buoyed asset markets. The S&P 500 rose 28
percent between Aug. 26, 2010, and Feb. 18 after he foreshadowed
the $600 billion program.
at the fastest rate since the 1987 crash as concern the economy
is stalling and optimism the Federal Reserve will try to spur
growth whipsaw investors.
The CHART OF THE DAY shows a measure known as three-month
historical volatility for the Standard & Poor’s 500 Index jumped
119 percent between July 22 and Aug. 23, the biggest rise over
the same amount of time in almost 24 years, according to data
compiled by Bloomberg. Excluding that year, the current increase
is the biggest in at least four decades.
“We’re going to remember these times for the rest of our
lives,” Brenna Hardman, a derivatives broker at MEB Options
LLC, said in a phone interview yesterday from the Chicago Board
Options Exchange. “People are scared. And I’d say bars around
here are seeing their bottom lines increase. I’ve never spent
such long days on the floor, and you don’t see anyone walking
down here smiling very big.”
The Dow Jones Industrial Average rallied or declined 400
points on four straight days this month, the longest streak
ever, as S&P’s reduction of the U.S. government’s credit rating
fueled concern the economy will falter. Harvard University
economics professor Martin Feldstein, a member of the National
Bureau of Economic Research that measures recessions, said this
month that the odds of a contraction are 50 percent.
Investors are awaiting Fed Chairman Ben S. Bernanke’s
speech in Jackson Hole, Wyoming, tomorrow for signs of whether
the central bank will introduce another program to boost the
world’s largest economy. During last year’s conference in
Jackson Hole, he signaled a second round of asset purchases,
known as QE2, that buoyed asset markets. The S&P 500 rose 28
percent between Aug. 26, 2010, and Feb. 18 after he foreshadowed
the $600 billion program.
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