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Buckle up: The day after the largest point-drop in the history of the Dow Jones Industrial Average, markets continued to swing wildly.
One of the most common scapegoats for the Monday meltdown among Wall Streeters? The robots. Machine-based traders have been blamed by many for the drop, which included a ramp up in the VIX, a measure of stock market volatility, and a steep sell-off in equities.
Speaking of the VIX: One casualty of the recent market action is Cboe Holdings, which fell 15% on Tuesday. The exchange is home to the VIX, and generates as much as a quarter of its revenue from products linked to the index.
In 2017, shorting the VIX was one of the easiest ways to make money. But the dream is now over as the so-called stock market fear gauge, which generally trades inversely to the S&P 500 and has spent most of the last year locked near record lows, spiked a record 84% on Monday.
Two of the products designed to return the inverse of the VIX saw their combined value shrink to $US150 million from $US3 billion.
Here’s more from Business Insider’s coverage of the sell-off:
- Here’s what Goldman Sachs, UBS, Deutsche Bank, and more are saying about the global stock market rout
- BARCLAYS: A group of niche volatility traders will sell $US225 billion of US stocks ‘in the next few days’
- ‘A perfect storm’: European stocks plummeted on Tuesday as global market volatility spiked
- Hedge funds are making an unprecedented bet that’s signalling more stock market pain
- ‘There’s no place to hide’: A Wall Street chief strategist breaks down the stock market’s catastrophic plunge
- High-speed trading firms have been hoping for market chaos just like this
- Here are three theories about why stocks are puking, and what they mean for the economy
- Wall Street lays out the case for a comeback that would quickly erase the stock market’s plunge
- One word keeps popping up as Wall Street tries to explain the stock market meltdown
- Credit Suisse is pulling the plug on an investment product that just got wiped out with the stock market’s drop
- A Wall Street trading giant is riding the volatility wave
Worried about the impact the market swing is having on your investments? Lauren Lyons Cole, a certified financial planner and a senior editor at Business Insider, explains what to do with your money right now.
In other economic news, Mohamed El-Erian tells us 3% growth is within reach in the US as long as it sidesteps three risks.
In crypto news:
- Bitcoin is now up as wild price swings continue in the crypto market
- ‘It doesn’t die and it comes back stronger’: Bitcoin believers are digging in amid the crypto bloodbath
- GOLDMAN SACHS: Bitcoin and other cryptocurrencies tend to be locked together – and that’s a big problem.
- Money was pouring into crypto during the stock market’s selloff
- Ripple’s XRP is the biggest loser of the cryptocurrency bloodbath so far, and is down 80% from its January peak.
Lastly, here’s where Americans pay the most in state income taxes, ranked from worst to best.