Wall Street braces for more volatility

The historic swings in the US stock market over the past two weeks have investors struggling to figure out where equities may be headed next. Only one thing seems clear: The volatility is far from over. A lack of progress on some of the economy\'s biggest issues — from sovereign debt in Europe to growing signs the US economy is in danger of slipping back into recession — will drive more uncertainty and moves from one extreme to another. However, with the S&P 500 down 17.6 per cent from its 2011 high, many investors say a bottom could be near and bargain hunters could trigger at least a momentary bout of buying. \"We\'re not even close to the end of volatility, but given a decline of almost 17 per cent in 13 days, we could see a rise from these levels,\" said Mike Gibbs, chief market strategist at Morgan Keegan in Memphis, Tennessee. Article continues below \"If there\'s something major with the European situation, that could be a catalyst for value investors to come back in.\" The situation in Europe has been dictating much of the market\'s recent movement. On Tuesday, shares fell after a meeting between the heads of France and Germany failed to squelch fears about Eurozone leaders\' ability to contain the region\'s debt issues, which could impact global growth and the profit outlooks of US banks. Market participants will also be looking ahead to comments from Federal Reserve Chairman Ben Bernanke at the central bank\'s annual meeting in Jackson Hole, Wyoming, on Friday. The Fed recently pledged to keep interest rates \"exceptionally low ... at least through mid-2013,\" news that sparked a short-lived rally, suggesting that there may be little new information coming out of the Jackson Hole meeting that could move markets. \"There\'s nothing Bernanke can do that\'s likely that will help stocks,\" said Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc, which has $3.2 billion in assets under management. \"If you see potential bank problems out of Europe before then, he might have some ammo for another round of quantitative easing, but absent that, investors hoping for an August surprise will likely be disappointed.\" An attractive yield The S&P 500 fell 4.7 per cent last week, extending losses of 12.4 per cent over the previous three weeks, its worst streak of that length in two and a half years. The CBOE Volatility Index, also known as the VIX, was up 20 per cent last week. In a note, Birinyi Associates wrote that while the market remained difficult in the short term, there were indications that stocks were attractively valued.