Stocks are in the midst of their longest stretch without a 2% sell-off since the financial crisis | Wilnesh News

Wall Street’s climb to new all-time highs has been markedly less volatile.

this S&P 500 Index It has been 377 days without a 2.05% sell-off. That’s the longest such benchmark has lasted since the financial crisis, according to FactSet data compiled by CNBC. The index has also not experienced a gain of at least 2.15% during that time.

As markets calmed down, investors piled into large technology stocks such as Nvidia, betting that artificial intelligence would boost profits. The S&P 500 is up more than 14% so far this year. Expectations of a rate cut by the Federal Reserve also boosted broad market indexes in 2024, as new data showed inflation was approaching the central bank’s 2% target.

Adam Turnquist, chief technical strategist at LPL Financial, said: “From a macro level, the cloud of macro uncertainty over the past 12 months has lifted, and the subsidence in inflation has provided much-needed clarity on the future path of monetary policy.” “The constant shift from rate hikes to rate cuts, and from recession to economic resilience, helped pull the VIX down to multi-year lows, ultimately shifting the backdrop for the stock market from a high-volatility state to a low-volatility one.

Many investors believe Chicago Board Options Exchange Volatility Index (VIX) Wall Street’s de facto fear indicator. Last month, the index hit its lowest level since November 2020.

“The lower VIX reflects complacency in the options market, which is at a three-year low,” said Joseph Cusick, senior vice president and portfolio specialist at Calamos Investments. “This makes sense because institutions have been actively hedging; With these insurance products in place, there is no urgency to sell.”

It’s unclear how long this period of low volatility will last.

In 2017, the S&P 500 had only eight daily gains of more than 1%, while the VIX index fell to an all-time low below 9. Then there was some relief.