The Stock Market Is Rotating. The Question is Where It Goes Next

-- The violent stock market selloff last week triggered by fears that the Federal Reserve missed its chance to help a faltering US economy ended one rotation trade and may have started another, leaving investors guessing where equities go from here.A Radical Fix for Britain’s Housing Crisis: A New Offshore City

That move is already starting to take hold. Investors poured nearly $1 billion into real estate and utility sector US exchange-traded funds last week, compared with just $300 million into tech ETFs, Bloomberg Intelligence data show.The first picked up steam in late June with demand for small-capitalization companies taking off. At the time, the Russell 2000 Index was trading at 23 times projected earnings, nearly in line with the S&P 500’s multiple of 21.2.

Meanwhile, volatility is surging, with the Cboe Volatility Index, or VIX, leaping as high as 29.66 on Friday, a level it hasn’t touched since March 2023. And the so-called VVIX Index, which measures the volatility of the VIX, is hovering around its highest levels since March 2022, when the Fed’s hiking cycle began.

Still, investors still aren’t paying up to hedge for a possible selloff. In the options market, contracts protecting against a 10% decline in the largest ETF tracking the S&P 500 in the next 60 days currently cost just 1.9 times more than options that profit from a 10% rally, data compiled by Bloomberg show.

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