Volatility ETFs soar as Facebook earnings rock markets
The CBOE Volatility Index and VIX-linked exchange-traded funds surged on Thursday after a weak outlook for Facebook’s parent company Meta Platforms fueled risky selling in U.S. stocks.
Among Thursday’s best performing non-leveraged ETFs, the iPath Series B S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) increased by 9.9% and the ProShares VIX Short Term ETF (NYSEArca: VIXY) advanced 10.1%, briefly testing their near-term resistances at the 50-day simple moving average. Meanwhile, the CBOE Volatility Index climbed 12.6% to 24.1.
Shares of Meta Platforms plunged more than 20%, wiping more than $200 billion from the company’s market capitalization.
“This definitely shakes investors’ resolve in the face of the recent relief rally we’ve seen in technology,” Robert Pavlik, chief investment strategist at SlateStone Wealth LLC, told Reuters.
Meanwhile, other big tech names also sold off as part of the broad risk-selling pressure.
“These stocks were really priced way beyond perfect,” Daniel Genter, managing director and chief investment officer at RNC Genter Capital Management, told the WSJ. “People say, well, guess what, perfection isn’t there.”
Tech stocks enjoyed a dominant position amid low interest rates and ample liquidity, but with high inflation and the Federal Reserve indicating a shift to more aggressive rate hikes to combat the rise consumer prices, fund managers adjust portfolios.
“People are going to start increasing allocations to value stocks, and to do that they’ll have to sell their growth stocks, even if they’re down 15% to 30%,” chief investment officer Jack Murphy told Reuters. investments from Easterly Investment Partners. .
Markets are now awaiting Amazon.com Inc., which will release its quarterly results after the closing bell. The e-commerce company previously warned late 2021 of a tough end to 2021 due to ongoing global supply chain issues, The Wall Street Journal reports.
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