U.S. Index Futures Fluctuate After Stock Slump as VIX Crosses 50

Updated on
  • Contracts on S&P 500, Dow, Nasdaq 100 drop in volatile trading
  • VIX gauge extends gain, heading for highest level since 2009
Jeremy Siegel, finance professor at the Wharton School, discusses the Dow’s plunge and interest rate policy.

U.S. stock-index futures fluctuated after a rout that on Monday sent the Dow Jones Industrial Average to its worst-ever point plunge.

E-mini futures on the S&P 500 Index expiring in March dropped 0.3 percent as of 7:36 a.m. in New York, after earlier erasing a slide of 3 percent to rise as much as 1.4 percent. Those on the Dow fell 1 percent, while Nasdaq 100 Index contracts slipped 0.2 percent. The Cboe Volatility Index climbed as much as 35 percent, poised for its highest close since March 2009.

“The correction and its severity could attract some buyers, especially if the selloff carries on for the rest of this week,” said Mohamad Al Hajj, an equity strategist at the research arm of investment bank EFG-Hermes Holding Co. in Dubai. “The SPX is down around 8 percent from the Jan. 26 peak, futures markets seem to be very volatile as well. Volatility will probably remain elevated as eyes will be on the Fed March meeting.”

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The VIX more than doubled on Monday, its biggest ever rally, raising questions about the future of exchange-traded products tied to it. It rose to as high as 50.30 on Tuesday.

Read more: ‘Buy the Dip’ Takes Hold at Allianz to JPMorgan as Rout Deepens

“Historians in the future will most likely analyze the ongoing market collapse as the first fully-fledged algorithmic crash,” Stephane Barbier de la Serre, strategist at Makor Capital Markets, said by phone. “Where from now? That’s anybody’s guess, but fundamentals have not been snuffed out overnight, so we reckon that in short-term view, the current crash is unlikely to go much beyond 15 percent peak-to-trough on aggregate.”

The S&P 500 Index may fall to a level of 2,400 points amid the market meltdown, said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty. in Sydney. “It’s clear that investors had got ahead of themselves,” he said, adding that the decline in futures might be due to some selling from Europe.

— With assistance by Blaise Robinson, Aleksandra Gjorgievska, and Filipe Pacheco

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