3/8/2007: Equity Markets Stabilizing?
Global equity markets seem to be calming down from the turmoil of the last week. Since the sell-off on February 27, they have remained volatile, but have not fallen much more. Following the close on March 3, the S&P 500 was off 5.2% from the February 26 close. However, a 1.5% rebound on the 6th erased some of the losses. As of close on March 7, the index was 4% below the February 26 close. (The S&P 500 is up 1% today as of this writing.) The VIX index, which measures the implied volatility in S&P 500 option prices, has fallen from nearly 20% on March 5 to less than 15%.
Not surprisingly, other equity indexes have fared worse than the S&P 500. (As we noted in our January 2007 Market Commentary, large-cap domestic equities are likely to hold up best in a global equity market downturn.) The Russell 2000 index of small-cap stocks is down 6%, and the MSCI Emerging Markets index was 8.1% lower.