CBOE Volatility Index (VIX) hits one-month high on Monday

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CBOE Volatility Index (VIX) hits one-month high on Monday

 CBOE Volatility Index (VIX) hits one-month high on Monday
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Highlights

  • All major sectors of the S&P 500 saw declined on Monday amid fears of a likely default by Chinese real estate titan Evergrande Group.
  • The stock selloff trend began on Sep 17 and is expected to continue.
  • The CBOE Volatility Index (VIX) hit a one-month high, suggesting a rough period for the stocks this week.

Top sectors of the S&P 500 (SPX) fell on Monday declined as concerns over the pace of the global economic recovery grew after China’s second-largest real estate firm reported a massive liquidity crunch with a US$300 billion debt.

Ten of the 11 segments of the index declined amid a heavy selloff on Monday. Experts believe that in the event of a default by Evergrande, it could send the stocks spiraling down and create a ripple effect on the global economy.

The CBOE Volatility Index (VIX) hit a one-month high of 27.31 at 2.13 pm ET on Monday while staying in the range of 23.90-27-86, indicating more troubles ahead. However, airline stocks gained as the government is set  to relax travel restrictions. Bust most sectors of the S&P 500 declined on Monday.

The CBOE Volatility Index (VIX) hit a one-month high of 27.31 at 2.13 pm ET on Monday while staying in the range of 23.90-27-86

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US economists are also concerned about the increase in the government’s borrowing limits. The government this week will vote for a debt ceiling and short-term expenditure measures to continue operating beyond Sep 30.

Also read: Evergrande woes resonate in Wall Street: Dow, S&P futures in red

Investors are expected to avoid risks while trading in the stock market. They would be keen to know whether the sell-off will continue or it is just another opportunity to buy stocks. The banking sub-index fell by 2.9 percent as investors chose to buy bonds amid concerns about default by Evergrande.

Meanwhile, stocks of technology giants like Apple Inc (Nasdaq: AAPL), Amazon.com Inc (Nasdaq: AMZN), Alphabet Inc (Nasdaq: GOOGL), and Tesla Inc (Nasdaq: TSLA) also slid, dragging down the S&P 500. 

Also read: Tesla (TSLA), Apple (APPL) stocks draw attraction amid market volatility

Another reason for the selloff could be the talks of a potential increase in corporate taxes that will lower the companies’ earnings. However, experts say that multiple concerns from political, health to government policies have been hounding the markets of late.

However, economists are hopeful that markets will calm down after these concerns, caused by extraordinary circumstances, gradually reduce.

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