Equities extended their losses after European Central Bank President Mario Draghi said there are signs the euro-area’s economic growth is slowing and policy makers must lift inflation from an “excessively low” level. Separately, a report by four economic institutes said Germany’s economy is on the verge of recession.

Volatility Return

The S&P 500 advanced 1.8 percent yesterday, the biggest jump since October 2013, following the Federal Reserve’s hint that interest rates will stay near zero amid concerns that a slowdown in global growth and stronger dollar will hurt the U.S. economy.

After plunging 1.5 percent on Oct. 7, the S&P 500’s rally yesterday was the biggest turnaround in almost three years. The measure ended 2.1 percent away from its all-time closing high of 2,011.36 reached Sept. 18.

Volatility is returning to stocks after the market experienced the longest stretch of calm in two decades. Seven trading days into October, the S&P 500 has posted four days of moves of more than 1 percent. The index went without a 1 percent move for 62 days through July 16, the longest stretch since 1995.

The Chicago Board Options Exchange Volatility Index, known as the VIX, rose 11 percent to 16.83 today and climbed on Oct. 7 to the highest since March.

Here to Stay

“We’ve seen the reintroduction of the risk-on risk-off propensity of the market and that high level of volatility is here to stay for awhile,” Drew Wilson, an investment analyst with Fenimore Asset Management in Cobleskill, New York, said by phone.

Some Fed officials said Europe’s cooling economy and low inflation could lead to a further appreciation of the dollar. That, in turn, might curb U.S. exports and limit price gains that have lagged behind the Fed’s goal. The release of minutes came a day after the International Monetary Fund cut economic- growth forecasts and warned of “frothy” equities.

European stocks dropped a third day today, extending losses from earlier in the week spurred by the IMF lowering its forecasts and data showing German industrial production contracted the most in more than five years.

Draghi said in speech in Washington that boosting growth in the euro area will have to come through improvements in productivity.

Price Stability

“We are accountable to the European people for delivering price stability, which today means lifting inflation from its excessively low level,” he said. “And we will do exactly that.”

Investors are also keeping an eye on developments in Hong Kong, where the government today suspended plans to hold formal talks with pro-democracy protesters tomorrow after leaders of the movement called for more demonstrations.

U.S. data today showed the number of Americans filing applications for unemployment benefits unexpectedly fell last week, pushing the average over the past month to the lowest level in eight years and signaling that employers are hanging on to workers as the economy improves.

“We are in a phase of uncertainty until the big companies release their third-quarter figures,” said Christian Zogg, who manages about the equivalent of about $10 billion as head of equity and fixed income at LLB Asset Management AG in Vaduz, Liechtenstein. “The question in the U.S. is whether companies can keep their good margins.”

Profit at companies in the S&P 500 rose 4.9 percent in the July-September period, according to the average estimate of analysts in a Bloomberg survey. PepsiCo and Family Dollar Stores Inc. reports earnings today.

Energy stocks declined 3 percent today, led by losses of more than 4 percent in both Newfield Exploration Co and QEP Resources Inc. The group has plunged 14 percent since reaching a high in June as the price of oil has tumbled.

--With assistance from Callie Bost, Lu Wang and Joseph Ciolli in New York and Inyoung Hwang in London.