As expected, many of the heavy-handed trade policies put in place at the beginning of the quarter have been either substantially scaled back or removed entirely over the course of the last month. Additionally, the few deals that have been made have essentially been relatively inconsequential and mostly kept to the status quo.
Extreme uncertainty around the tariff announcement in April is what caused such a swift drop as investors scrambled to adjust their growth expectations. Now that it’s clear that not much will be changing on a grand scale, that reaction has erased entirely, and the market is back to trading more closely with previously held expectations. Looking at price alone, the S&P 500 is currently priced just about where it was at the beginning of March and is also back above a key level of former support we’ve been tracking.
The volatility index has also dropped back below 20, signaling a drastic change in the risk profile of owning US equities. Smaller expected moves in the indexes lead to an environment where correlations begin to fall and stock selection becomes much more important. The US market is still drastically underperforming most of the world this year, but now that there have been signs of recovery, the odds of it beginning to participate in the global rally are greater than they have been since January.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The content is developed from sources believed to be providing accurate information.
The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly..
The CBOE Volatility Index® (VIX®) is meant to be forward looking, showing the market's expectation of 30-day volatility in either direction, and is considered by many to be a barometer of investor sentiment and market volatility, commonly referred to as “Investor Fear Gauge”.