The U.S. stock markets experienced a volatile week, with major indexes closing slightly lower despite recovering from a significant sell-off earlier in the period. The S&P 500 came close to correction territory, having dropped over 9% from its mid-January peak, while the Nasdaq Composite fell by over 15% from its high.
The CBOE Volatility Index (VIX), often referred to as Wall Street's 'fear gauge,' spiked to levels not seen since March 2020, reflecting the market's heightened uncertainty before stabilizing later in the week. Several technical factors contributed to this volatility, including programmed trading strategies and a partial unwind of the so-called carry trade.
On the other hand, the market found some support from short covering and corporate stock buybacks, which helped cushion the sell-off. Economic data also played a role in shaping market sentiment. Reports from major companies indicated softening consumer demand, particularly in the travel and food sectors, with companies like Airbnb, Delta, and Yum! Brands reporting slower sales.
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