Stocks and Bonds Go on Another Wild Ride Wednesday

The U.S. stock market continued its unpredictable swings Wednesday, with stocks initially plunging on the open, then rallying in the morning, only the dip again.

The Dow Jones Industrial Average, which had been up by more  380 points earlier in the day, ended down by around 19 points, or close to flat for the day. The broader S&P 500 was down 0.5 percent for the day and the Nasdaq Composite was down 0.9 percent.

Prior to the recent bout of volatility, stocks have been unusually calm for several years. Indicators of market volatility, such as the CBOE Volatility Index, or Vix, remained at remarkably low levels for most of 2016 and all of 2017. But on Friday and Monday, the markets experienced much higher levels of volatility. On Tuesday, the Vix breifly hit its highest intraday trading level since the financial crisis. On Wednesday, however, it declined again to what many would consider a normal level, in keeping with historical levels even if elevated compared with recent experience.

The Dow is now down about 5 percent from its record high on January 26.

Bond yields were also in flux Wednesday. The yield on the benchmark 10-year U.S. Treasury note, which had been rising on Monday and Tuesday, initially fell Wednesday morning to 2.785 percent. But following a Treasury auction of new bonds in which demand was considered weaker than expected, the 10-year yield climbed to 2.8457 percent. That is close to the levels that were associated with the beginning of the sell-off on Friday. Bond yields rise as the prices of bonds fall.

Traders say technical market factors, such as the market turning against large bets against volatility, have contributed to market volatility initially sparked by fears of inflation.