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CNBC
33 minutes ago
- Business
- CNBC
Wall Street's 'fear gauge' just experienced its third biggest decline ever. What it means going forward
Wall Street's so-called fear gauge recorded a steep slide over recent months. That's good news for investors looking longer term. The CBOE Volatility Index (VIX) has dropped around 35 points over the two months since President Donald Trump rolled back many of his market-roiling tariffs in April. That's the third largest decline in the VIX's history going back to 1990, according to Bespoke Investment Group data, ranking behind periods in late 2008 and mid 2020. .VIX 3M mountain The VIX over the last 3 months As the VIX has retreated, stocks have rebounded significantly from the sell-off seen in the wake of Trump's initial policy unveiling. However, Bespoke noted that stocks' climb of around 20% is relatively small compared to historical performance in the aftermath of slides of this magnitude in the VIX. "Historically, the relationship between the two would suggest a surge of more than 50% over the same period, but stocks are 'only' up 20%," the firm wrote to clients. "That makes this a pretty large outlier between options and the underlying assets they track." Looking ahead, Bespoke said this pullback in the fear gauge can be "bullish" when using a longer time horizon. For example, the largest two-month VIX drops in history have correlated with average moves for the S & P 500 of nearly 6% over the following six months and almost 12% over a year. However, Bespoke warned that traders should be willing to wait, as moves over one and three months are relatively muted. Said another way, investors focused only on near-term action will find a significant tumble in the VIX to be "not very relevant." "In other words, the easy money has been made," Bespoke wrote to clients. "But there could likely be more on the table for patient investors going forward." A short round trip Bespoke isn't the only firm watching the market action following the volatility scare. Essentially, Deutsche Bank said this has been the shortest market plunge on a volatility shock on record. Strategist Parag Thatte said in a note to clients published last week that in a typical volatility-induced jolt, equities take about two months to bottom and then another four or five months to make up losses. This time, however, the stock market has bottomed and clawed back losses in under two months. In past shocks, the S & P 500 would be down close to 10% at this point. But as of midday Tuesday, the S & P 500 is up more than 6% since Trump first announced his plan for broad and steep levies on April 2. .SPX mountain 2025-04-02 The S & P 500 since April 2
CNBC
02-06-2025
- Business
- CNBC
Why the stock market continues to hold up in the face of uncertain trade policy
It's only fair to give the stock market credit for hanging tough through the 2025 uncertainty storm. But it means the market is now taking credit in advance for a clearer and more favorable policy and economic picture developing from here. What does hanging tough look like? The S & P 500 index fought its way back to about flat after one of its worst-ever starts to a year through the first week of April. The index has also been hanging around the same patch of the field, spending all of the past two weeks and much of the last seven months in the range travelled on a single day, Nov. 6, 2024. The lines on the chart span the distance traveled in that initial one-session rally after Election Day. Since then, two quarters of much better than expected aggregate earnings have entered the books, offset by a confidence crash following the maximalist tariff proposals of April 2 and the abiding limbo state of the various overlapping pauses, deadlines and threats. Evidence that the market is implicitly assuming a fair degree of trade-war de-escalation could be seen in the market's relatively modest response both to President Trump's threat of a 50% tariff on imports from the EU just over a week ago, as well as its muted celebration when that measure was paused — or when a trade court ruled most of the global tariffs appear unlawful. Friday's flutter of reports about stalled talks with China and the countries' mutual accusations of bad faith drew a shrug from the tape, the S & P finishing flat to preserve a 1.9% weekly gain. Bespoke Investment Group on Friday reported that while the S & P 500 badly underperformed in March and April on days when trade headlines dominated the news, in May the market has largely ignored them. The reams of Wall Street strategy work attempting to handicap the trade-policy outcomes is coalescing around the 10% global baseline duties plus something higher for China and some targeted sectors, resulting in a blended rate somewhere above 15%. That's a level of transactional friction in the global economy that is multiples higher than long-prevailing rates, yet less decisively scary than the punitive plan that crashed the market and created the early-April buying opportunity, at the moment of peak uncertainty. Why the stock market is holding near record Among the reasons stocks have held within a few percent of record highs as it digested the huge relief rally the past couple of weeks is the here-and-now economic readings have mostly been reassuring: Upward leakage in continuing unemployment claims but no spike in layoffs. Generally steady if uninspiring consumer activity, with mostly benign inflation data. A badly stuck housing market, but no more so than a few months ago. Calm restored in the Treasury market, yields settling back slightly to quiet the overexcited talk about fiscal fissures. All of the numbers carry a bold-faced asterisk for being either not fully reflective of tariff effects or helped temporarily by some pull-forward of demand to get ahead of tariffs. Here again, the market is supported by steady fundamentals, while also by extension pricing in an expectation that they will persist. Corporate-credit spreads have mostly round-tripped back to unconcerning levels, non-U.S. stocks are in solid uptrends and the industrial sector has returned to its former highs. Not a market clenched in anticipation of a significant air pocket in growth. It's hard to ignore the other tailwind for the tape, the reassertion of the mega-cap growth cohort as relative leaders. Here's the Magnificent Seven relative to the equal-weighted S & P 500. Back to the July 2024 crest, not quite up to the fourth-quarter exuberance peak. Someone in the business of diagramming head-and-shoulders topping patterns might have something to offer here, but for now it's enough to say the market has again turned to the giants for support in a time of need. While the scolds who think index progress should come from the many over the few will lament this shift, the reality is the brute force of superior profit growth among the dominant digital platform companies is hard to resist. Mag 7, tech bid With Nvidia completing the reporting period for the megas, FactSet shows the group notched a 27% earnings jump from the year earlier, 11 percentage points head of forecasts, with the remainder of the S & P 500 growing a third as quickly. Even within the Mag7, it's not the cleanest story. FactSet notes that consensus is projecting annual profit-growth rates will step down toward 10% over the next few quarters. I've pointed out here recently that the biggest earners, such as Microsoft and Alphabet , are spending so heavily on AI capacity that free-cash-flow growth is on hiatus this year. And the share-price action is somewhat spotty, too. Apple is a conspicuous laggard, the stock on the verge of breaking down below a former peak from almost two years ago. AAPL 5Y mountain Apple, 5 years Nvidia, meantime, has lost its post-earnings pop, the stock back to where it closed Wednesday just before what was taken as reassuring forward guidance. Alphabet has been kept in the penalty box, its valuation now at a significant discount to the broad market, as investors fear what AI might do to its core profit stream from search. Tesla has always been an uncomfortable fit in the Mag7, there only because of its massive market value and intermittent fits of headlong stock momentum. It does not have massive profitability derived from an pervasive asset-light network platform. Its earnings are set to be lower today than three years ago and forecasts have been slashed for this year and next. But the stock is useful as a gauge of investors' collective willingness to believe in Elon Musk's promised version of the future. Well more than half of its $1.1 trillion in market capitalization is attributable not to the auto and energy-storage business that produce all Tesla revenue, but to the perpetually "almost there" robotaxi and humanoid-robot ventures that get the faithful excited. While the market credits Tesla today with hundreds of billions in value for such unproven gambits, Alphabet's $2 trillion market cap reflects very little credit for the more-advanced Waymo robotaxi division. The market likes a pure play and a good storyteller, not to say meme-spinner. For now, this current of lavishly capitalized belief is running only through narrow channels of the market, into Tesla and Palantir and CoreWeave , with tributaries into long-shot quantum-computing names with such lengthy timelines for judging success that traders choose not even to worry about it. This revival of the "transformative tech" bid — along with the resilience of hard macro data and glass-half-full take on how tariffs will interact with the economy — helps account for the tape's ability to hold up during this in-between phase for trade policy and with the Federal Reserve resolutely in wait-and-see mode. It means that two months after universal panic over maximum uncertainty created a "Close your eyes and buy" moment, it's now time to hold while keeping eyes wide open for how reality takes shape relative to fairly benign expectations.
Yahoo
30-05-2025
- Business
- Yahoo
5 Sector ETFs That Beat the Market in May
Wall Street staged a solid comeback in May from early April lows, which were triggered by the "Liberation Day" tariffs. The S&P 500 experienced the fastest recovery since 1982, according to Bespoke Investment Group. Trade deal talks and solid tech earnings buoyed market sentiments. A resilient economy added to further strength. The rally has been broad-based. We have highlighted five top-performing ETFs from different industries that were the leaders over the past month. These are Global X Uranium ETF URA, VanEck Vectors Digital Transformation ETF DAPP, Sprott Nickel Miners ETF NIKL, Grayscale Bitcoin Adopters ETF BCOR and Generative AI & Technology ETF CHAT. After the initial shock of the tariffs, there were signs of de-escalation. This month, the United States temporarily slashed tariffs on Chinese goods from 145% to 30%, while China will lower its retaliatory duties on U.S. goods from 125% to 10%. The temporary reduction in rates will run for 90 Trump also postponed the implementation of a 50% tariff increase on all EU products, from June 1 to July 9. With this, the trade negotiations between the two countries have accelerated. The bouts of economic data supported the bullish sentiment. Consumer confidence in the economy improved in May after five straight months of declines. Inflation in April cooled to the lowest level since February 2021. The Consumer Price Index, which tracks a variety of costs throughout the economy, rose 2.3% year over year in April, down slightly from 2.4% in March. Meanwhile, the U.S. labor market remained resilient amid the tariff chaos. The economy added better-than-expected 177,000 jobs while the unemployment rate held steady at 4.2%, providing further assurance about the economy's health (read: Consumer Confidence Surges in May: ETFs to Gain). Total first-quarter earnings for the 477 S&P 500 members that have reported results are up 11.4% from the same period last year on 4.4% higher revenues, with 74.2% beating EPS estimates and 62.9% beating revenue estimates, per Zacks Earnings companies struggled to beat consensus estimates this reporting cycle. However, the technology sector results have been better than expected, with the earnings growth rates primarily in line with recent periods. Notably, the first-quarter revenue beat percentage is above the 5-year average. Uncertainty surrounding Trump's tariff plans continues to linger. While some tariffs were challenged in court, with rulings deeming them unlawful, an appeals court temporarily reinstated them. The legal back-and-forth has introduced volatility and uncertainty into the the rapid market recovery led to elevated valuations, with the S&P 500 trading at over 22 times 2025 earnings. Analysts caution that such levels may not be sustainable without continued positive dig into the details of the abovementioned ETFs:Global X Uranium ETF (URA) – Up 34.6%Global X Uranium ETF provides investors access to a broad range of companies involved in uranium mining and the production of nuclear components, including those in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries. It tracks the Solactive Global Uranium & Nuclear Components Total Return Index and holds 48 stocks in its basket. Canadian firms make up the largest allocation in the basket at 39.7% while the United States accounts for a 16.6% share. Global X Uranium ETF has amassed $3 billion in its asset base and charges 69 bps in annual fees. It trades in an average daily volume of 3.4 million shares (read: ETFs to Capitalize on Trump's Orders to Spur Nuclear Energy).VanEck Vectors Digital Transformation ETF (DAPP) – Up 26.9%VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 23 securities in its basket. It charges 51 bps in annual fees and trades in an average daily volume of 613,000. DAPP has accumulated $182.4 million in its asset Nickel Miners ETF (NIKL) – Up 19.3%Sprott Nickel Miners ETF is the only U.S.-listed ETF focused on nickel mining companies, providing a critical material necessary to meet the rising global demand for batteries and energy storage, along with continuing demand for stainless steel. It tracks the Nasdaq Sprott Nickel Miners Index and holds 21 stocks in its basket. Sprott Nickel Miners ETF has amassed $9.9 million in its asset base and trades in an average daily volume of 40,000 shares. It charges 75 bps in annual Bitcoin Adopters ETF (BCOR) – Up 19.2%Grayscale Bitcoin Adopters ETF offers exposure to a global basket of publicly traded companies that have adopted Bitcoin as part of their corporate treasury. This theme focuses on the long-term growth of the corporate adoption of Bitcoin as a hedge against fiat inflation and a tool for corporate treasury diversification and risk management. Grayscale Bitcoin Adopters ETF has accumulated $3 million in its asset base since its inception in late April and charges 59 bps in annual fees (read: ETFs to Ride on New Wave of $111K Bitcoin Rally). Generative AI & Technology ETF (CHAT) – Up 19%Generative AI & Technology ETF is the world's first Generative AI ETF and is an actively managed ETF. It provides exposure to impactful technological innovations now and into the future and holds 38 stocks in its basket. Generative AI & Technology ETF has amassed $274.6 million in its asset base and trades in an average daily volume of 53,000 shares. It charges 75 bps in annual fees. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Global X Uranium ETF (URA): ETF Research Reports VanEck Digital Transformation ETF (DAPP): ETF Research Reports Sprott Nickel Miners ETF (NIKL): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
29-05-2025
- Business
- Yahoo
2025 a Strong Year for 'Buy the Dip' in ETFs: 5 Future Drivers
Investors who have embraced the "buy the dip" strategy in 2025 have been handsomely rewarded, with the S&P 500 delivering its strongest post-pullback returns in over three decades. According to research from Bespoke Investment Group, the S&P 500 has gained an average of 0.36% in the trading session following a down day so far in 2025, as quoted on Yahoo Finance. The only year with a comparable performance was 2020, which saw a 0.32% average post-dip gain. A recent example came on May 27, 2025 when the S&P 500 surged more than 2% after falling 0.7% in the final session before the holiday weekend. The rally was sparked by President Trump's decision to scale back huge previously threatened tariffs on EU —a recurring catalyst behind many of 2025's rebound rallies. Below we highlight a few factors that could boost Wall Street ETFs higher ahead. On May 28 evening, a panel of judges from the US Court of International Trade ruled against key elements of Trump's trade agenda. The court struck down global tariffs imposed under emergency powers, calling them unlawful. While the decision is a setback for Trump's policies. SPDR Dow Jones Industrial Average ETF Trust DIA added 1.1% premarket on May 28, while SPDR S&P 500 ETF SPY advanced 1.5%, Invesco QQQ Trust QQQ gained 2% and iShares Russell 2000 ETF IWM jumped 1.9%. NVIDIA NVDA beat revenue expectations but missed on adjusted earnings per share (EPS), citing the impact of a US government ban on the sale of its H20 chips to China. The company warned it could lose as much as $8 billion in sales next quarter due to the restrictions. Despite this, NVIDIA's stock surged 6.3% in premarket trading on May 28. During the earnings call, CEO Jensen Huang criticized the US chip curbs, arguing they incentivize innovation among Chinese competitors and undermine the U.S. position. 'China's AI moves on with or without US chips,' Huang said. 'The question is whether one of the world's largest AI markets will run on American platforms.' NVIDIA's performance gave Wall Street renewed hope that major tech companies can weather the uncertainties surrounding Trump's trade measures, even as export restrictions create new challenges. While the tech sector is still recovering from a pullback in February—triggered in part by market reactions to low-cost AI DeepSeek—this hasn't derailed investor optimism. Instead, the pullback caused some valuation corrections and set the stage for renewed focus on U.S. tech leadership and AI investment. According to Bank of America, the current earnings cycle confirms that hyperscalers are continuing with their AI investment strategies, even if capex growth is moderating slightly (read: Why Big Tech ETFs Still Remain Great Bets). Retail participation has been a major force behind the renewed strength in Wall Street. Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance that their customers bought heavily during April. 'Buy the dip' has been working for them for the past few years. Since the market's most recent bottom on April 8, the S&P 500 has climbed nearly 19%. JPMorgan quantitative strategist Emma Wu reported that retail investors poured over $50 billion into U.S. equities from April 8 onward—surpassing the $46 billion seen between March and June 2020, as quoted on Yahoo Finance. The week following Trump's April 2 'Liberation Day' tariff announcement saw record dip-buying flows, including $3 billion in net purchases on April 3—the largest single-day retail buying total since VandaTrack began tracking such data in 2014. Total Q1 earnings for the 477 S&P 500 members that have reported results are up +11.4% from the same period last year on +4.4% higher revenues, with 74.2% beating EPS estimates and 62.9% beating revenue estimates, per Earnings Trend. However, trade tensions have weighed on estimates so far. Note that total S&P 500 earnings for the June quarter are expected to be up only +5.5% year over year on +3.8% higher revenues, with a broader and greater pressure on estimates relative to other recent periods. Q2 earnings estimates for 15 of the 16 Zacks sectors are down since the quarter got underway, with Aerospace as only exception. The Tech sector's estimates are down since the start of the period, but they have notably stabilized in recent weeks. Against this backdrop, court ruling may brighten the scenario. Despite a short-term market boost, long-term uncertainty over Trump's tariffs continues to weigh on business confidence. Note that Trump administration immediately appealed the ruling. Companies are delaying hiring, investment, and wage decisions, while investors shift to short-term strategies amid policy volatility. The lack of clarity threatens broader economic growth and keeps the Fed in a wait-and-see mode. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports iShares Russell 2000 ETF (IWM): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
CNBC
27-05-2025
- Business
- CNBC
How the stock market typically performs during the summer
Memorial Day weekend marked the unofficial start to summer in the U.S., a notable period for investors who like to, as the market adage goes, " sell in May and go away ." Interestingly, a look back over the last 50 years at the S & P 500 's performance shows the three-month stretch from the Friday before Memorial Day through to the Friday before Labor Day in September has mostly been positive for equities, according to Bespoke Investment Group. "The S & P 500's median performance during this period has been a gain of 3.7%, with positive returns 72% of the time," read a note from the firm. .SPX 6M mountain S & P 500, over 6 months In fact, a closer look at the numbers shows the gains are especially pronounced when the S & P 500 was already higher year to date heading into the period, with the benchmark notching a 4.3% gain on a median basis, with positive returns 74% of the time, the firm found. On the other hand, in the 15 years when the S & P 500 was lower on the year heading into the period, the index gained just 1.4% on a median basis, with gains 67% of the time. On a historical basis, at least, that suggests the summer months this year could be more challenging for stocks. On Friday, May 23, before the Memorial Day weekend, the S & P 500 closed lower on a year-to-date basis. On Tuesday, however, the broader index was last slightly higher for the year. Other Wall Street firms are already thinking gains could be capped this summer, given that investors won't be gaining any clarity around trade until the July tariff deadline. JPMorgan's Fabio Bassi, the bank's head of cross-asset strategy, said the S & P 500 could "remain rangebound, with limited short-term upside." However, others expect that means equity weakness is contained, especially if the stock market can get past some key hurdles around trade and the U.S. deficit. Canaccord Genuity's Michael Graham said he holds a neutral view on the short-term outlook for stocks, but said he sees "a pathway toward many of these risk factors dissipating later in the summer" if investors can avoid significant tariff volatility.
