Investors Shaken as Week of S&P 500 Reversals Ignite Volatility
2014-10-18 04:00:01.2 GMT
By Eric Lam and Joseph Ciolli
Oct. 18 (Bloomberg) -- David Wolf, a fund manager at
Fidelity Investments in Toronto, says equity spasms such as
those that shook global stocks this week scare professionals as
much as everyone else.
“My dad has been quite panicky,” Wolf said of his father,
Bernard, a retired economics professor from Canada’s Schulich
School of Business. “He knows what markets are all about and he
knows what the economy is all about, and even he gets scared”
when stocks rise and fall this fast.
One of the most volatile five days for stocks since the
financial crisis ended yesterday with the Standard & Poor’s 500
Index rallying 1.3 percent to 1,886.76. That pared the decline
since Oct. 10 to 1 percent and handed investors a fourth
consecutive weekly retreat. The benchmark index slumped as much
as 3 percent on Oct. 15 before recovering in the biggest swing
since 2011.
Stocks slid, recovered and lurched again as concerns
mounted that Europe will slip into a recession just as Federal
Reserve bond buying ends. Speculation that Ebola is spreading,
concern about the health of the global economy and selling by
hedge funds sent the Chicago Board Options Exchange Volatility
Index above 26 on Oct. 15, a two-year high.
Earnings season got under way with Netflix Inc. tumbling 21
percent for the week after a price increase slowed subscriber
growth. JPMorgan Chase & Co. slid 4 percent, the most since
August, after net income fell short of forecasts.
The Dow Jones Industrial Average retreated 163.69 points,
or 1 percent, to 16,380.41. The Nasdaq Composite Index lost 0.4
percent.
‘Buying Opportunity’
Wolf, part of Fidelity’s global asset allocation team, said
the firm has been getting more calls from clients worried about
the market’s losses. Very little about the outlook for the North
American economy has changed, he said, adding that the drop is a
buying opportunity not seen in months.
While Canada’s S&P/TSX Composite Index was essentially
unchanged for the week, the index had two days of losses of
about 1 percent and then reversed with two days of approximate 1
percent gains.
“This was a really spectacular week to watch,” Herbert
Perus, who helps oversee $36 billion as head of equities at
Raiffeisen Capital Management in Vienna, said in a phone
interview. “A lot of risks came into the minds of short-term
orientated traders.”
Hedge Funds
Stocks favored by professional speculators saw some of the
biggest swings. The 20 stocks in the Russell 1000 Index in which
hedge funds hold the biggest stakes have tumbled 8.4 percent
since the beginning of October, twice the rate of the full
index.
Small-cap stocks staged the biggest rally since June as
investors began to regain confidence. After sliding 13 percent
from March 4 to Oct. 13, the Russell 2000 Index rebounded with
three days of gains exceeding 1 percent. The index ended the
week up 2.8 percent.
The S&P 500 is still down 6.2 percent from a record a month
ago. Pressure is mounting for European Central Bank stimulus
such as government-bond purchases as the 18-nation euro area
struggles to rebound from a sovereign debt crisis and subsequent
austerity measures.
Speculation that central banks will step in to support the
economy fueled gains at the end of the week. The ECB will start
“within the next days” to purchase assets in the new program
to support the economy, Benoit Coeure, an executive board
member, said on Oct. 17. St. Louis Fed Bank President James
Bullard said the previous day that policy makers should consider
delaying the end of bond buying.
Airline Shares
Robert Stimpson, a fund manager in the Ohio town visited by
an Ebola-infected nurse, said his conversations have been
dominated by concern over the disease. Transportation shares
were whipsawed by speculation the spread of Ebola will hurt
travel plans, with the Bloomberg U.S. Airlines Index losing more
than 6 percent on Oct. 13. The gauge finished the week up 4.2
percent.
Chimerix Inc., a drug maker working on a treatment for
Ebola, had a weekly gain of 10 percent. Lakeland Industries
Inc., a manufacturer of disposable protective gear with a market
value below $100 million, slid 14 percent. The stock has doubled
in the past month.
“The market got to a position where it was prone to
weakness and it happened to occur at the same time that scary
news such as Ebola was rolling out,” Stimpson, who works at Oak
Associates Ltd. in Akron, Ohio, said by phone. “It’s a
confluence of factors coming together to lead to a very
difficult two weeks in the market.”
For Related News and Information:
Developed Market View: DMMV <GO>
Graphing: GRAPH <GO>
Feature stories on stocks: TNI STK GREET <GO>
World Trends and Reversals: WT <GO>
Equity screening: EQS <GO>
Top Stocks News: TOP STK <GO>
--With assistance from Jonathan Morgan in Frankfurt.
To contact the reporters on this story:
Eric Lam in Toronto at +1-416-203-5725 or
elam87@bloomberg.net;
Joseph Ciolli in New York at +1-212-617-3928 or
jciolli@bloomberg.net
To contact the editors responsible for this story:
Lynn Thomasson at +1-212-617-0506 or
lthomasson@bloomberg.net
Jeff Sutherland
2014-10-18 04:00:01.2 GMT
By Eric Lam and Joseph Ciolli
Oct. 18 (Bloomberg) -- David Wolf, a fund manager at
Fidelity Investments in Toronto, says equity spasms such as
those that shook global stocks this week scare professionals as
much as everyone else.
“My dad has been quite panicky,” Wolf said of his father,
Bernard, a retired economics professor from Canada’s Schulich
School of Business. “He knows what markets are all about and he
knows what the economy is all about, and even he gets scared”
when stocks rise and fall this fast.
One of the most volatile five days for stocks since the
financial crisis ended yesterday with the Standard & Poor’s 500
Index rallying 1.3 percent to 1,886.76. That pared the decline
since Oct. 10 to 1 percent and handed investors a fourth
consecutive weekly retreat. The benchmark index slumped as much
as 3 percent on Oct. 15 before recovering in the biggest swing
since 2011.
Stocks slid, recovered and lurched again as concerns
mounted that Europe will slip into a recession just as Federal
Reserve bond buying ends. Speculation that Ebola is spreading,
concern about the health of the global economy and selling by
hedge funds sent the Chicago Board Options Exchange Volatility
Index above 26 on Oct. 15, a two-year high.
Earnings season got under way with Netflix Inc. tumbling 21
percent for the week after a price increase slowed subscriber
growth. JPMorgan Chase & Co. slid 4 percent, the most since
August, after net income fell short of forecasts.
The Dow Jones Industrial Average retreated 163.69 points,
or 1 percent, to 16,380.41. The Nasdaq Composite Index lost 0.4
percent.
‘Buying Opportunity’
Wolf, part of Fidelity’s global asset allocation team, said
the firm has been getting more calls from clients worried about
the market’s losses. Very little about the outlook for the North
American economy has changed, he said, adding that the drop is a
buying opportunity not seen in months.
While Canada’s S&P/TSX Composite Index was essentially
unchanged for the week, the index had two days of losses of
about 1 percent and then reversed with two days of approximate 1
percent gains.
“This was a really spectacular week to watch,” Herbert
Perus, who helps oversee $36 billion as head of equities at
Raiffeisen Capital Management in Vienna, said in a phone
interview. “A lot of risks came into the minds of short-term
orientated traders.”
Hedge Funds
Stocks favored by professional speculators saw some of the
biggest swings. The 20 stocks in the Russell 1000 Index in which
hedge funds hold the biggest stakes have tumbled 8.4 percent
since the beginning of October, twice the rate of the full
index.
Small-cap stocks staged the biggest rally since June as
investors began to regain confidence. After sliding 13 percent
from March 4 to Oct. 13, the Russell 2000 Index rebounded with
three days of gains exceeding 1 percent. The index ended the
week up 2.8 percent.
The S&P 500 is still down 6.2 percent from a record a month
ago. Pressure is mounting for European Central Bank stimulus
such as government-bond purchases as the 18-nation euro area
struggles to rebound from a sovereign debt crisis and subsequent
austerity measures.
Speculation that central banks will step in to support the
economy fueled gains at the end of the week. The ECB will start
“within the next days” to purchase assets in the new program
to support the economy, Benoit Coeure, an executive board
member, said on Oct. 17. St. Louis Fed Bank President James
Bullard said the previous day that policy makers should consider
delaying the end of bond buying.
Airline Shares
Robert Stimpson, a fund manager in the Ohio town visited by
an Ebola-infected nurse, said his conversations have been
dominated by concern over the disease. Transportation shares
were whipsawed by speculation the spread of Ebola will hurt
travel plans, with the Bloomberg U.S. Airlines Index losing more
than 6 percent on Oct. 13. The gauge finished the week up 4.2
percent.
Chimerix Inc., a drug maker working on a treatment for
Ebola, had a weekly gain of 10 percent. Lakeland Industries
Inc., a manufacturer of disposable protective gear with a market
value below $100 million, slid 14 percent. The stock has doubled
in the past month.
“The market got to a position where it was prone to
weakness and it happened to occur at the same time that scary
news such as Ebola was rolling out,” Stimpson, who works at Oak
Associates Ltd. in Akron, Ohio, said by phone. “It’s a
confluence of factors coming together to lead to a very
difficult two weeks in the market.”
For Related News and Information:
Developed Market View: DMMV <GO>
Graphing: GRAPH <GO>
Feature stories on stocks: TNI STK GREET <GO>
World Trends and Reversals: WT <GO>
Equity screening: EQS <GO>
Top Stocks News: TOP STK <GO>
--With assistance from Jonathan Morgan in Frankfurt.
To contact the reporters on this story:
Eric Lam in Toronto at +1-416-203-5725 or
elam87@bloomberg.net;
Joseph Ciolli in New York at +1-212-617-3928 or
jciolli@bloomberg.net
To contact the editors responsible for this story:
Lynn Thomasson at +1-212-617-0506 or
lthomasson@bloomberg.net
Jeff Sutherland