Following months of placid trading, U.S. stock volatility has surged this month as a run of alarming data coincided with the unwinding of a massive, yen-fueled carry trade to deal equities their worst selloff of the year. The S&P 500 is still down around 6 per cent from a record high set last month, even after making up ground in a series of rallies after Monday’s crushing selloff.
US Economy
At issue for many investors is the trajectory of the U.S. economy. After months of betting on an economic soft landing, investors rushed to price in the risk of a more severe downturn, following weaker-than-expected manufacturing and employment data last week.
Though stocks have rallied in recent days, traders believe it will be a while before calm returns to markets. Indeed, the historical behavior of the Cboe Volatility Index – which saw its biggest one-day jump ever on Monday – shows that surges of volatility usually take months to dissipate.
Known as Wall Street’s fear gauge, the index measures demand for options protection from market swings. When it closes above 35 – an elevated level that it topped on Monday – the index has taken 170 sessions on average to return to 17.6, its long-term median and a level associated with far less extreme investor anxiety, a Reuters analysis showed.
US Market Forecast
One potential flashpoint will be when the U.S. reports consumer price data on Wednesday. Signs that inflation is dropping too steeply could bolster fears that the Federal Reserve has sent the economy into a tailspin by leaving interest rates elevated for too long, contributing to market turbulence.Overall, companies in the S&P 500 have reported second-quarter results that are 4.1 per cent above expectations, in line with the long-term average of 4.2 per cent above expectations, according to LSEG data.
Company Earnings Report
Walmart and Home Depot are among companies reporting earnings next week, with their results seen as offering a snapshot on how U.S. consumers are holding up after months of elevated interest rates.
The end of the month brings earnings from chip giant Nvidia , whose shares are up around 110 per cent this year even after a recent selloff. The Fed’s annual Jackson Hole gathering, set for August 22-24, will give policymakers another chance to fine tune their monetary policy message before their September meeting.
US Election 2024
The U.S. presidential race is also likely to ramp up uncertainty. With nearly three months until the November 5 vote, investors are braced for plenty of additional twists and turns in an election year that has already been one of the most dramatic in recent memory.
FAQs
Q1. When is US elections this year?
A1. US elections will be held on November 5.
Q2. Which are major indices of US Stock markets?
A2. S&P 500, Dow Jones Industrial Average, and Nasdaq are key indices of US Stock market.
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