Rally in GameStop and other targeted stocks feeds wider volatility in global markets
Shares on Wall Street followed European bourses lower on Friday, as an intensifying battle between retail traders and brokers over a handful of closely followed stocks drove up market measures of volatility.
The S&P 500 was down 1.9 per cent at the closing bell in New York, ending the blue-chip benchmark’s worst week since October. The tech-heavy Nasdaq Composite sank 2 per cent.
A rise in volatility typically encourages investors to reduce risk, helping to explain the decline from record highs earlier in January.
The Cboe Vix — a measure of expected volatility known as Wall Street’s “fear gauge” — ended at 32.4, well above its long-term average of just below 20, as another hectic session propelled recent day-trader favourites such as GameStop and AMC Entertainment higher.