Stock Market Overview – Stocks Drop and the VIX Surges More than 10%

Stocks were hammered on Wednesday with the Dow Industrials down 1.8%, or 490 points. The S&P 500 large-cap index was down nearly 1.8%, with every sector in the red. This comes despite a larger than expected rise in private payrolls according to ADP and Moody’s analytics. Tariffs on the EU are expected to go into effect on October 14, which also weighed on US shares. The US will add 10% tariffs on Aircraft and a 25% tariff on agricultural products. This followed a ruling from the world trade organization. All sectors were lower, led down by energy, real estate was the best performing sector in a down tape. The VIX surged higher reflecting continued concerns above-market volatility.

The VIX Surges Above 20%

The VIX volatility index surged more than 10% on Wednesday, rising above 20% for the first time since early August. The long term trend in the VIX is rising as the 50-day moving average crossed above the 200-day moving average which is known as the golden cross. This points to a higher value for the VIX.

The Markets Face Headwinds

The market is facing several economic warning signs that come as President Donald Trump faces a push for impeachment from Democrats. The possibility of impeachment has been negative for US stocks for several reasons.  One of the main concerns from investors is that impeachment proceedings will undermine trade negotiations, especially with China. The trade issue with China are not working and it has push the world into a global recession. The US. will impose tariffs on the full $7.5 billion worth of goods authorized by the WTO decision, but the rate of those tariffs will be lower, set as a 10% tariff on large commercial aircraft, and 25% on agricultural and industrial goods.

Private Payrolls Rise More than Forecast

Private sectors jobs rose more than expected in September, according to ADP. The private payroll report, companies hired 135,000 more workers in the month, ahead of the 125,000 expected. That was a drop from the 157,000 in August, which was downwardly revised from 195,000. September’s gain was the slowest since June and brought the 2019 monthly average down to 145,000. Companies with fewer than 50 employees saw the slowest hiring gain for the month at just 30,000. Large firms, with at least 500 workers, created 67,000 new jobs, while medium-sized businesses added 39,000.