The stock market’s fear gauge jumped suddenly this week, with volatility returning to equities amid heightened concern the Federal Reserve may raise interest rates higher than investors had been expecting, according to DataTrek Research.
“Equity vol is back,” said Nicholas Colas, co-founder of DataTrek, in a note Wednesday. “We are back in ‘2022 mode’, where it pays to watch the VIX.” The VIX, which measures expected volatility for the S&P 500 index SPX over the next 30 days, signals “trouble” when it’s consistently above 20, Colas observed in a note last month. The fear gauge was “rarely” below 20 last year, he then wrote, when the S&P 500 suffered its biggest losses since 2008.
The S&P 500 remains up so far in 2023. The index on Tuesday had its worst performance since mid-December, leaving it with a year-to-date gain of 4.1%, according to Dow Jones Market Data. “We are back in 2022’s market dynamic, where investors are increasingly concerned” the Fed may be “taking rates higher than previously expected,” said Colas, and that “inflation will linger longer than previously hoped.”
“Last year, it averaged a daily close of 25.6,” said Colas. “Conversely, the VIX has averaged a close of 20.0 this year, right at its long run average.”
Stay away from the market!!!! The big rip off continues! Let these companies use their own money.