The Stock Market Is Crazier Than Ever, But No One Really Knows Why


August was an especially insane month for the markets, which fluctuated hundreds of points in either direction almost every day, nearly sending anxious traders and ticker-watchers into cardiac arrest. The New York Times did the math, and yes, "It has become more likely for stock prices to make large swings — on the order of 3 percent or 4 percent — than it has been in any other time in recent stock market history," but determining a cause is less exact. Some blame worldwide turmoil, including Greece's second bailout and the U.S. credit downgrade, while others point to 24-hour news cycle, which trades on and amplifies that international uncertainty:

Some economists say they fear the volatility may feed upon itself. The violent ups and downs, said Robert Shiller, an economics professor at Yale, may in turn undermine confidence in the economy, and the weakness in the economy can lead to more strident politics — all of which feeds the volatility loop.

"Bad things can happen," explains one economics professor rather simply. "This worries me." That's the cue for another big plunge.

Market Swings Are Becoming New Standard [NYT]