Whitworth Says VIX Shows Equities ‘Not Out of Woods’

U.S. stock market volatility that surged to the highest level since March 2009 may persist as Europe’s debt crisis defies resolution, Relational Investors LLC’s Ralph Whitworth said.

The options-market gauge known as the VIX jumped 28 percent to 40.10 last week, extending its increase since April 12 to 157 percent, according to data compiled by Bloomberg. The index shows investors are paying more to protect against stock declines as governments seek to reduce deficits in Greece, Portugal and Spain. The Standard & Poor’s 500 Index is down 9.5 percent for May, poised for the biggest decline in 15 months.

“Volatility sent a strong message that we’re not out of the woods globally,” said Whitworth, who helps oversee $6.5 billion at San Diego-based Relational Investors. “I expect the modest recovery that’s under way to have resilience, with the major caveat being a big blowup in Europe. That could spread like an infection.” (more)