• The realization that the COVID-19 outbreak would wreak havoc on the U.S. and global economies has come at an alarmingly quick pace. With it, markets around the world have fallen precipitously. The S&P 500 plummeted nearly 34% from its all-time high (reached as recently as February 19), marking the fastest-ever decline into a bear market, and has since recouped more than 15%.
  • During the sell-off, markets have faced massive volatility, both to the upside and the downside, as investor sentiment swung swiftly in reaction to the stream of health, economic and fiscal updates.
  • Indeed, the level of volatility markets have seen has been historic. By one tracker, the CBOE Volatility Index (VIX), which measures investor expectations of near-term volatility, reached an all-time high on March 16 before moving lower the following several days.1   
  • Viewed another way, the S&P 500 has seen historically large daily moves in the past several weeks. In fact, 20%, or four of the S&P 500 Index’s 20 largest daily (percentage) moves have taken place since March 12.2    
  • Investors would be wise to prepare for additional bouts of volatility throughout the remainder of 2020, as the longer-term economic impact of COVID-19 becomes clearer.

1 Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/VIXCLS.
2 S&P Dow Jones Indices, as of March 26, 2020.


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