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Fear returns after Trump border flap

Fear, which has been absent on Wall Street since President Trump was elected, made a comeback Monday.

The cause of the market jitters was an executive order signed Friday by Trump designed to close the U.S. border to folks from Syria indefinitely as well as a temporary ban on refugees and citizens of seven Middle East countries with Muslim-dominated populaces. The backlash to the border flap caused uncertainty about many of Trump’s policies to shoot up, offsetting what had been more bullish narratives about Trump’s business-friendly plans to cut corporate taxes, reduce business regulations and spend big on infrastructure.

“The narrative Monday is Trump’s immigration moves may cost him some time and effort, and that he won’t be able to push ahead with corporate tax reform” and other more market-positive policies, says Bill Stone, chief investment strategist at PNC Asset Management Group.

As stocks went down, a Wall Street fear gauge shot up.

The VIX, a measure of future volatility expectations, jumped more than 12% to 11.88 Monday. On Friday, it hit an intraday low of 10.30 — near the record low of 9.31 from 1993. (The VIX’s intraday high was nearly 90 during the 2008 financial crisis.) Since Election Day, the level of complacency on Wall Street had declined. The fear level was nearly cut in half from Nov. 8 to its Jan. 27 low.

Is fear back for good? Stay tuned.