Ebola fears likely to become less scary for US investors

Market fluctuations eased on Friday and the Standard & Poor’s 500 index ended its best week in almost two years as fears dwindled that the first Ebola diagnosis in New York could lead to widespread contagion in the nation’s financial capital.

The market’s favored gauge of anxiety, the CBOE Volatility Index, dropped from readings above 30 on Thursday to about the average daily level at 16.63 on Friday, while options activity suggested low expectations for volatility, signaling that investors no longer assign a high probability to wild shifts based on Ebola news.

“Ebola is really center stage as the No. 1 fear of the market right now because of the immediate reaction we’ve had to it,” said John Kosar, director of research with Asbury Research in Chicago. “It’s been more immediate and severe than any of the geopolitical tensions we’ve seen.”

After the possible Ebola diagnosis in New York was reported on Thursday, the S&P 500 SPDRs exchange-traded fund traded about 2.56 million shares at 2:56 p.m. — the busiest minute of the day other than the 4 p.m. close.

But the decline was limited to a move of about 0.6 percentage point, and stocks still ended higher, up 1.2 percent.

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