The S&P 500 hasn’t traded in a daily range of 1% or greater for 34 sessions. That’s the longest such a trend has continued since 1995. But investors shouldn’t be lulled to sleep by a sleepy market. Be vigilant and continue to avoid risk. Chris Dieterich explains the Index’s low volatility at The Wall Street Journal.
To be sure, the stock market has mostly been going up even though the daily moves have been soporific. Since the streak began, the index has climbed just 1% in total, but it’s still set new all-time highs along the way, most recently on Jan. 25. Still, uncertainty about the contours and timing of Trump administration policies have worked in concert with high valuations and the wait-and-see approach on the part of the Federal Reserve about when next to raise interest rates to hold stocks in check.
“The market is bobbing and weaving around new highs,” wrote David Rosenberg, chief economist, and strategist at Gluskin Sheff.
That’s a marked contrast to how stocks behaved in the immediate aftermath of the surprise victory of President Donald Trump on Nov. 8. The S&P 500 shot up 6.2% from Election Day to Dec. 13.
The absence of a one-day move in the S&P 500 is consistent with other readings of ultra-low volatility.
The historical volatility of the SPDR S&P 500 exchange-traded fund, a measure of how volatile that S&P 500 has been over two months, sits at 6.5, the lowest in at least two years, according to CBOE Livevol. Ninety-day historical volatility is barely higher at 8.1, also the lowest in two years.
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