NEW YORK - A cocktail of interest rate anxiety and geopolitical tensions is keeping U.S. stock investors defensive and driving Wall Street’s most closely watched volatility gauge to its highest level in half a year.
The S&P 500 is still up around 5% year-to-date and stock bulls are hopeful a strong earnings season could bolster investor confidence in the weeks ahead. "In hindsight the market was a little overbought a few weeks ago and there was a little bit too much optimism, exuberance, FOMO," said Joe Tigay, portfolio manager for Rational Equity Armor Fund, using the acronym for “fear of missing out.”
Market participants noted the VIX is trading 1.26 points higher than its May futures, the index's largest premium to front month futures in four months. That is in contrast to a 0.75 point discount the front month futures have typically traded at over the last decade, data from LSEG showed.