>> We're monitoring the stock markets. They're functioning very well, and we continue to believe in the long-term impact of the stock market.>> US Treasury Secretary Steven Mnuchin trying to appear calm in the face of the first global market turmoil of the Trump White House, but functioning well and feeling well are two different things.
Investors once again had to stomach wild swings Tuesday, but this time, they went home with a smile. The DOW rallying 567 points, a gain of more than 2%, after plunging at the open, ending days of selling, that wiped away $4 trillion in global market value. Reuters' reporter Trevor Hunnicutt explains why the return of big swings in the market is causing a headache for some investors.
>> What people have been doing is betting that that volitility will either stay the same or go down, and they've been able to make a little bit of money. What happened is that, as some of those trades unwound, people, essentially, were on the wrong side of it, and as they took massive losses, that created other massive losses, and volatility tends to feed on itself, and so what happened is that a lot of people lost a lot of money, and that contributed to a further sell-off in stocks.
>> And Honeycutt warns that damage may not be totally over. As investors start to see how much they lost on betting the wrong way on volatility, they may have to sell some of the gains made in the stock market to offset those losses. But large, deep-pocketed institutional investors may be this market's saving grace.
They're still backing the stock market, and at least on Tuesday, were willing to buy what others were selling.