Implied Volatility

U.S. Stocks Decline to End Volatile Week

The Dow Jones, S&P 500 and Nasdaq Composite Index declined sharply on Friday.

The Dow and broader U.S. stock market continued lower on Friday, as investors remained on high alert for rising interest rates as early as March.

Wall Street’s major indices were lower at the close, with the Dow Jones Industrial Average (DIA) falling 450.02 points, or 1.3%, to 34,265.37.

The broad S&P 500 Index (SPY) of large-cap stocks declined 1.9% to settle at 4,397.94. Most sectors finished in negative territory.

Meanwhile, the technology-focused Nasdaq Composite Index (QQQ) plunged 2.7% to close at 13,768.92.

A measure of implied volatility known as the CBOE VIX (VXX) rose on Friday. The so-called “investor fear index” reached an intraday high of 29.79 on a scale of 1-100, where 20 represents the historical average. It would eventually settle up 12.7% at 28.85.

In commodities, oil prices declined on Friday, as U.S. West Texas Intermediate fell 80 cents, or 0.9%, to $84.75 a barrel on the New York Mercantile Exchange. Brent, the international futures contract, fell 71 cents, or 0.8%, to $87.67 a barrel.

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In precious metals, gold prices declined, as the February futures contract fell $10.90, or 0.6%, to $1,834.00 a troy ounce on the Comex division of the New York Mercantile Exchange. Silver futures fell 43 cents, or 1.7%, to trade at $24.29 a troy ounce.

The Final Word: The Nasdaq Composite and S&P 500 capped off their worst weekly skid since the onset of the pandemic, as investors remained vigilant about weak economic data and high inflation. Investors are pricing in at least three interest rate hikes by the Federal Reserve this year as policymakers combat rising cost pressures.