Investors Remember 'Stocks Can Go Down Too' in Return to Hedging.

Hedging is becoming popular again among investors due to concerns about various factors such as the US presidential election, second-quarter earnings, economic growth, and interest rates. The Cboe Volatility Index, which measures options prices, experienced a significant increase as stocks declined and calls for Joseph Biden to withdraw from the presidential race grew. If Vice President Kamala Harris becomes the Democratic nominee, risk pricing is expected to resemble the period before Biden's debate against Donald Trump. Traders are also monitoring technology company earnings and the Federal Reserve's potential interest rate cuts. The stock market has experienced a decrease in frothiness, with investors realizing that stocks can also decline and seeking protection. The VIX reached its highest level since April, and the cost of options on the gauge hit a three-month high. The Treasury futures market saw a flattening of the curve as investors began losing patience with the "Trump steepener trade." Traders are also protecting against potential rate moves by the September meeting. While it is uncertain if this shift in positioning will persist, the quieter summer days may amplify market movements. [Extracted from the article]