Known for obvious reasons as 'the fear index', a drop in the VIX may be a sign of investor overconfidence, while a rapid rise in the VIX could be one of the first indications that a crash is taking place, triggering investors to exit positions en masse.
When it comes to shopping, consumers are always on the lookout for a deal. Black Friday, Cyber Monday and the Christmas season are prime examples of low prices spurring voracious demand for products. However, for some reason, investors don't get nearly as excited when stocks go on sale. In the stock market, a herd mentality takes over, and investors tend to avoid stocks when prices are low.
Trading volume indicates the number of shares or contracts traded in the market. It tells if a particular price trend is supported by market players. If the price of a share is increasing with higher than normal volume, it indicates investors support the rally and that the stock would continue to move upwards.
(END) Dow Jones Newswires
December 18, 2020 07:38 ET (12:38 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
By Caitlin Ostroff
U.S. stock futures hovered between gains and losses as investors monitored whether Covid-19 infections and worsening economic data would push lawmakers to cement a coronavirus aid package.
Futures tied to the S&P 500 rose 0.1%, suggesting the benchmark stocks gauge will open relatively unchanged after notching another record close Thursday. Futures tied to the technology-focused Nasdaq-100 declined 0.1%.
Top Republicans and Democrats are closing in on a coronavirus relief package that would send direct payments to many Americans, enhance unemployment benefits, provide aid to small businesses and fund distribution of the Covid-19 vaccine, among other measures.
Investors have cheered the prospects of additional fiscal stimulus in recent days as high Covid-19 infections and measures to contain its spread have weighed on the economy. Data released Thursday showed that the number of workers seeking unemployment benefits had reached a three-month high.
"There is clear deterioration in the U.S. economy," said Luca Paolini , chief strategist at Pictet Asset Management . "The market expects fiscal stimulus. There will be a big disappointment if there is no agreement."
In offhours trading, shares in FedEx fell 2.9% after the delivery company beat analyst profit expectations, but said higher revenue was partially offset by increased costs, including from safety equipment to protect workers from Covid-19 .
Tesla's stock could jump in advance of its inclusion in the S&P 500 next week. Dozens of index funds that track the S&P will need to purchase tens of billions of dollars of stock at Friday's closing price to track the index as closely as possible.
Earnings updates are due from Nike and Darden Restaurants , owner of LongHorn Steakhouse and Olive Garden.
Stocks in Asia were mostly lower. The Wall Street Journal reported that U.S. officials were debating how broad to make a list of Chinese companies banned from investment by Americans because of ties to China's military. China's Shanghai Composite Index closed 0.3% lower and Hong Kong's Hang Seng fell 0.7%. Japan's Nikkei 225 index fell 0.2%.
Shares in Semiconductor Manufacturing International Corp . fell 5.2% in Hong Kong trading after the Trump administration added China's largest manufacturer of computing chips to the export blacklist , restricting the company's access to high-end technology.
The pan-continental Stoxx Europe 600 rose 0.1%. Investors were closely watching negotiations between the U.K. and the European Union over a post-Brexit trade deal. Some expect that the British pound could rally further if a deal is reached. European negotiators have said they want a deal by Sunday. Sterling has risen 2.3% this week against a broadly weaker dollar.
"The clock is running down," said Hugh Gimber, a strategist at J.P. Morgan Asset Management .
In bond markets, the yield on 10-year Treasury notes edged up to 0.941% from 0.929% Thursday. Yields rise when prices fall.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
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