Investors are risking a big change in US stock prices, even as the benchmark stock index continues to rise, and coveted shares such as Tesla and Amazon soared to new records. The Cboe VIX index, which shows equity market volatility – often referred to as a gauge of Wall Street’s fear – remains in the range of 41 percent above its historical average of close to 28. Another long-term measure of US stock volatility, according to Cboe, reaches 50 percent above the long-term average. The index is already far below the highest level ever achieved during a sharp market decline at the depth of the coronavirus crisis earlier this year. But high levels continue to indicate that investors are still on guard to deal with potential shocks to the S&P 500 equity index, which reflects anxiety over the scale of the market recovery since last March. Meanwhile, you can also visit http://www.volatility75.net/brokers.html if you are interested in the market volatility of the S&P500.
The vice president of trading and derivatives at Charles Schwab, Randy Frederick stated that The recent level of VIX is a perfect indication of how uncertain the current situation is. He also stated that one of the challenges of this situation is that we are all basically trying to adapt historical models and patterns with today’s scenarios.
The aggressive steps of the Federal Reserve and the US federal government have helped avert a more severe financial and economic crisis due to the spread of Covid-19. Their intervention has helped drive recovery on the stock market. The Nasdaq Composite, which reflects the movement of high-tech shares, hit a record high on Tuesday, while the S&P 500 reached 6.2 percent from an all-time record high.
Kristina Hooper, head of global market strategy at Invesco, said concerns that kept the VIX index high compared to historical norms were also reflected in other markets, including US government bonds. The yield on the 10-year US Treasury bond remained near a record low of 0.67 percent, reflecting investor demand that remained high on the safe-haven assets. Gold, which is often bought during a crisis, has experienced a rally of up to 18 percent this year, and on Tuesday was at an eight-year high.