Dow, ETFs Recover, But VIX Says This Isn’t Over
October 16th 2008 at 2:00pm by Tom Lydon
It was an impressive finish for Wall Street and exchange traded funds (ETFs) after the way things were looking this morning.
After falling 380 points at the open, the Dow Jones Industrial Average closed more than 400 points higher. This was in defiance of several negative economic reports, including a slump in factory orders and depressed homebuilder sentiment, reports Peter A. McKay for the Wall Street Journal.
One of the few positive reports was that the Consumer Price Index remained flat for September, signalling that inflation is being held in check.
The S&P 500 saw its worst percentage drop since the 1987 crash on Wednesday, but was up 4.3% today. The health care and technology were particularly strong, gaining 5% each.
Investors are still skittish, though. The Volatility Index (VIX) once again touched new records, this time soaring to an intraday high of 80. The index measures the prices of options contracts to gauge the nervousness of investors. It closed at 67.1, which is still historically very high.
Oil prices continued their descent, closing at a 14-month low of $69.85 a barrel. The price is less than half of the record high it reached in July, reports Stevenson Jacobs for the Associated Press. Gas fell another 4 cents to a national average of $3.08 a gallon.
OPEC announced that it was moving an emergency meeting up by almost a month to discuss the rapid drop in prices, but traders ignored the news. The meeting will take place on Oct. 24.
- United States Oil (USO), down 22.1% year-to-date (black line)
- United States 12-Month Oil (USL), down 14% year-to-date (green line)
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