Knowledge Base
Assess the causes of market fluctuations
Which measure taken by the Fed helped stop the panic selling spiral in March 2020?
The Fed cut rates to 0-0.25% on 15 March 2020 and announced unlimited Quantitative Easing on 23 March, precisely the day the market hit bottom. These massive and credible interventions halted the panic selling spiral. (Source: assessment of the March 2020 policy response)
Which event caused the sharpest two-day decline in the S&P 500 since March 2020 in April 2025?
The 'Liberation Day' announcement on 21 March 2025, followed by universal tariffs of 10% plus additional tariffs of up to 50% on 60 countries on 2 April, triggered this decline. The causes include political uncertainty and fears of a trade war. (Source: assessment of April 2025 volatility causes)
What was the S&P 500 performance in 2022?
The S&P 500 lost 19.4% in 2022, its worst year since 2008. This performance was due to a convergence of factors, notably post-COVID inflation and aggressive monetary tightening. (Source: assessment of 2022 volatility causes)
What was the primary cause of the 34% S&P 500 crash in March 2020?
The primary cause of the 34% S&P 500 crash in March 2020 was the external health shock from the global spread of COVID-19 and lockdowns, which created massive uncertainty about the economic impact that was impossible to quantify. This shock was amplified by the simultaneous oil price shock and the flight to liquidity. (Source: assessment of the March 2020 COVID crash causes)
Volatility linked to the economic cycle generally spans from a few days to a few weeks.
Volatility linked to the economic cycle is associated with slowdowns and recessions, spanning months to years, as in 2001, 2008, or 2022. Episodic volatility, on the other hand, lasts from a few days to a few weeks. (Source: volatility typology)
Major market movements generally result from a single cause.
The overall assessment of market fluctuation causes reveals that major movements generally result from a combination of factors rather than a single cause. The ability to correctly assess the relative weight of each factor is crucial. (Source: overall assessment of fluctuation causes)
Categorize items by dragging them to the appropriate zones
Items to categorize:
Macroeconomic factors
Monetary policy factors
Geopolitical factors
Psychological factors
Macroeconomic factors include GDP and CPI; monetary policy factors include rate decisions; geopolitical factors include conflicts; psychological factors include the VIX. (Source: assessment of structural volatility factors)
Exogenous volatility
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Exogenous volatility stems from unpredictable external shocks of variable duration, such as the COVID pandemic in March 2020. These shocks are external to the economy and often difficult to anticipate. (Source: volatility typology)