(Bloomberg) -- Volatility gripped financial markets with the coronavirus surging in the U.S. just days ahead of a crucial presidential election.
The Cboe Volatility Index, or VIX, surged to its highest level since mid-June as record virus cases, harsher lockdowns in Europe and a slowing U.S. labor-market recovery renewed fears of a deeper recession. Tensions had already been high with less than a week before the U.S. vote.
“Choppy markets are here for a while, and I think we’re going to continue to see them until we see a vaccine that is widely distributed and we can move past Covid,” said Chris Gaffney, president of world markets at TIAA Bank. “Every time we see a resurgence, you’re going to see additional restrictions, which impacts how people spend money.”
The VIX soared above 40 on Wednesday amid a stock rout that sent the S&P 500 Index to a plunge of about 3%. The CBOE NDX Volatility Index -- a measure of implied volatility for the tech-heavy Nasdaq 100 Index -- was on track for its highest close since April.
While bets on post-election calm had been growing earlier this week, the potential of reinstated virus lockdowns in the U.S. could keep volatility elevated after next week’s vote.
“Just because we hit election day, I don’t think that takes away the volatility,” Gaffney said. “There’s a lot of uncertainty in the markets even after election day.”
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