Traders work on the floor of the New York Stock Exchange during morning trading on January 11, 2024.
Angela Weiss | Afp | Getty Images
Wall Street’s rise to record highs occurred amid noticeably low volatility.
S&P 500 Index 377 days have passed without a 2.05% sell-off. This is the longest run for the measure since the Great Financial Crisis, according to FactSet data compiled by CNBC. The index also did not show an increase of at least 2.15% during this time.
The S&P 500 went 377 days without a selloff of 2.05% or more, the longest stretch since the Great Financial Crisis.
CNBC
This market lull comes as investors pour money into mega-cap tech stocks like Nvidia amid bets that artificial intelligence will boost profits. Year to date, the S&P 500 is up more than 14%. Expectations for Federal Reserve rate cuts also supported the broad market index in 2024 as new data showed inflation nearing the central bank’s 2% target.
“At a high level, the clouds of macro uncertainty have lifted over the past 12 months as falling inflation provided much-needed clarity on the future path of monetary policy,” said Adam Turnquist, chief technical strategist at LPL Financial. “The shift in the narrative from rate hikes to rate cuts and recession to economic resiliency helped push the VIX to multi-year lows, ultimately shifting the backdrop for stocks from a high-volatility regime to a low-volatility regime.”
The S&P 500 experienced its longest period without growth of 2.15% or more since the Great Financial Crisis.
CNBC
Many investors believe that CBOE Volatility Index (VIX) de facto fear sensor on the Street. Last month it hit its lowest level since November 2020. On Friday it was trading around 13, close to historically low levels.
“[T]The low level of the VIX reflects complacency in the options market, with the VIX at a three-year low,” said Joseph Cusick, senior vice president and portfolio specialist at Calamos Investments. “This makes sense because institutions are actively hedging; with these insurance products, there is no immediate need to sell the underlying asset.”
It is unclear how long this period of low volatility will last.
In 2017, the S&P 500 recorded just eight daily moves of more than 1%, while the VIX fell to an all-time low below 9. However, volatility returned to the market the following year, and the VIX rose above 50 before declining.