US stocks fluctuated between gains and losses on Tuesday after a heavy market sell-off on Monday that spilled over into Europe and Asia.
The S&P 500 was down 4.1% or 113 points, while the Dow Jones Industrial Average plummeted 4.6%, or 1175 points at the market’s close on Monday.
Both indices rebounded slightly on Tuesday morning after initially falling, the S&P was up 0.38% or 10 points, meanwhile the Dow pared its losses and was up 1.56%, or 380 points for the day at mid-afternoon Tuesday.
The S&P 500 started the day dropping 2% before recovering and Dow was at one point down 500 points before it too made up ground.
The Cboe Volatility index or VIX, which is known as Wall Street’s ‘fear gauge’ and measures the volatility of the S&P 500 index, spiked to as high as 50 early Tuesday morning but has since fallen to 37 midday Tuesday.
Erin Browne, head of asset allocation at UBS Asset Management, said that the market sell-off over the past few days showed ‘both the dangers of crowded positions and of the power of technical forces when combined with consensual positioning.’
‘Our view that the sell-off has been predominantly driven by technicals rather than fundamentals is a high conviction one and our central thesis remains unchanged,’ he said. ‘Importantly, we do not believe that the very strong global growth and earnings backdrop has suddenly evaporated.’
Brian Jacobsen, multi-asset strategist with Wells Fargo Asset Management, echoed this sentiment, adding that the sell-off felt more like a technical correction rather than anything fundamentally driven.
‘What to do depends on how you were allocated before the sell-off began. We are staying the course with most of our allocations as we’re in it for the long haul and believe that we should stay the course until there are signs the fundamentals are deteriorating,’ he said. ‘For some of our investment strategies, we’re viewing this as an opportunity to increase our exposure to risk, whether it’s credit or equity risk.’
Amid the global equities markets sell-off, a number of investment firms and robo-advisors suffered website outages and malfunctions under heavy traffic.
Investors have complained online about the website shutdowns or inaccessibility of their accounts at Fidelity, Merrill Lynch, TD Ameritrade, Betterment, Charles Schwab, Wealthfront and Vanguard among others.
As stocks continued to seesaw on Tuesday, Treasury secretary Steven Mnuchin tried to ease concerns in a House Financial Services Committee hearing by voicing his confidence in the market's 'strong fundamentals.'
‘I don’t think these types of moves, given how much the market has rallied, do have financial stability concerns,’ Mnuchin told lawmakers at the Committee, according to a Wall Street Journal report.