Volatility returned to the markets last week as participants digested the Federal Reserve interest rate decision and the growing risk of a second wave of coronavirus. In its decision, the Fed painted a dovish picture of the US economy, where the unemployment rate will remain at almost 10% in the next two years.
Meanwhile, CNN’s fear and greed index reached the highest level since March as euphoria returned to the markets. For example, shares in bankrupt companies like JC Penney, Hertz, and Chesapeake Energy spiked. Similarly, the valuation of Nikola, an electric truck company that is yet to sell a car, passed that of Ford, the iconic American manufacturer. The CBOE VIX index rose by more than 25% last week.