Yesterday's potholeWhile the magnitude of Tuesday’s equities rout was impressive, the S&P 500 only reversed gains made in the previous four sessions that had been fueled by expectations of cooling inflation that would give the Federal Reserve room to temper its tightening path. The lack of a surge in the VIX index -- known as the “fear gauge” -- suggests that the selloff was a recalibration of those expectations rather than panic selling.
A semblance of calm returned to markets on Wednesday after the carnage sparked by hotter-than-expected American inflation that prompted investors to reassess the outlook for interest rates and economic growth.