To Paul Zemsky, the challenge in the stock market is to keep your head while others are losing theirs. “As an investor, what I’m thinking right now is don’t panic,” said the 52-year-old head of multi-asset strategies at Voya Investment Management LLC in New York. He spoke as the Standard & Poor’s 500 Index (SPX) staged one the most volatile sessions in three years, rising as much as 1.4 percent and falling 1 percent as West Texas Intermediate crude briefly dipped below $45 a barrel and copper hit its lowest level since 2009.
“Every time oil goes down into a new range, those fears reignite,” Zemsky said in a phone interview. “Will something happen in Russia? Will a hedge fund blow up? Which banks will get hammered by this?” Signals from energy and bond markets rattled stocks for an eighth day as the Chicago Board Options Exchange Volatility Index climbed above 20 and the Dow Jones Industrial Average pared a loss that reached 143 points. The euro slumped to a nine-year low on bets policy makers will ramp up stimulus, while yields on 10-year Treasuries fell to match a 20-month low.
Concern about the impact of plunging oil on investment and what falling yields signal about economic growth are testing the resilience of U.S. stocks that have tripled since 2009. The stress pushed a Bank of America Corp. gauge of hedging costs in bond, stock, currency and commodity markets to an 18-month high.