|Bid||0.00 x 1000|
|Ask||0.00 x 800|
|Day's Range||34.99 - 35.94|
|52 Week Range||25.59 - 56.92|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.89%|
US equity indexes finished the week that ended May 11 on a positive note as equity market bulls took control of the proceedings. Given the muted response to the Iran nuclear deal pullout, we can expect a further fall in volatility this week.
Different people interpret the VIX different ways. For some, a low VIX and dropping volatility signal a good time to invest, basically seeing the overall volatility and worry come down in the market. For others, it is a sign of complacency. Both are right. When you look at last year’s low VIX persistent throughout the year, coupled with high returns of close to 20% for the S&P 500 (SPY) and close to 30% for the Nasdaq Comp (QQQ), one would conclude that lower VIX = better. But in January when the VIX bottomed below 9 before ballooning to over 50 in February, low VIX = worse. So which one?
The largest concern is the May 12 deadline for renewing the nuclear deal with Iran. This week, market volatility could be impacted by the inflation report and any developments surrounding the Iran nuclear deal.
The ADP March employment report was published on May 2. The report offered deeper insight into employment trends across different sectors in the US employment market. ADP and Moody’s Analytics prepared the monthly report.
The week ending April 27 was filled with many surprises, which were mainly positive. The US GDP and Employee Cost Index were higher than the expectations, which cleared the way for the Fed to continue tightening the policy. The US ten-year (IEF) broke 3% for the first time in four years. The US dollar recoupled with US bond yields and surged against all of the majors. Last week, North Korea and South Korea’s presidents met in person. Also, the US will initiate trade talks with China. Both of these developments were positive for the markets. ...
The S&P 500 Index (SPY) continued its negative run for a second consecutive month in March, as trade war fears and geopolitical tensions made investors risk-averse. The S&P 500 Index declined ~3.9% in February and ~2.7% in March, with these declines primarily being driven by increased trade tensions rather than any change in the underlying fundamentals. The Conference Board Leading Economic Index (or LEI) uses the performance of the S&P 500 Index (VOO) as one the constituents of the LEI.
Many risks that pushed stock market volatility higher in the last few weeks have started to retreat, which helped equity market indexes last week. President Trump paused further sanctions on Russia, and Trump’s planned meeting with Kim Jong Un after the latter said North Korea would end nuclear tests pushed a major geopolitical risk off the table for now. The risk of a flattening yield curve has also reversed as the US ten-year yield breached the February high on the back of renewed inflation expectations.
The primary reason cited by the FOMC (Federal Open Market Committee) for holding off on interest rate hikes since 2016 was lagging inflation growth. Whenever the Fed signaled rate hikes, the yield curve flattened since investors were not convinced that inflation (TIP) growth would pick up the pace, which would limit the Fed’s ability to raise rates. The Fed has set a target of 2% inflation (VTIP) growth, at which point the economy is expected to be running at a normal pace.
There are some reports that the US could press for more sanctions on Russia this week, which could increase the volatility in global indexes. Apart from geopolitical issues, President Trump’s legal issues and China’s trade issues could also keep investors away from the markets. Markets are hoping for a solid earnings season, which kicked off last week.
The FOMC staff review indicated that US financial markets have been turbulent since the last meeting, which resulted in increased equity market volatility (VXX) and lower equity (VOO) asset prices. The reason cited for the increased equity market volatility was the surprising uptick in average hourly earnings in the January employment report, which made investors concerned about higher inflation and the interest rate increase. ...
China retaliated by floating a 25% levy on U.S. soybean imports, sending the commodity’s price plunging and gearing up for a high-stakes clash between the two countries. While soybeans ranked first on the list, it also caused Brazil to enter the podium due to its position as the second-largest soybean producer in the world and also a potential beneficiary of the trade spat between the U.S. and China. Homebuilders came in third as new home orders surged amid a strong housing demand that benefits from low unemployment and rising wages. Volatility continued to be of interest as markets ebb and flow amid global political uncertainty, while small-cap value equities are appealing to investors who just got out of the big names.
Did China Pacify Trade War Anxiety? The index was primarily impacted by the increasing worry about the trade war between the United States and China. Then on Thursday, the US administration suggested an additional $100 billion worth of tariffs on Chinese imports into the US, taking the total tariffs to $150 billion.
The trade war turmoil that rocked markets last week seemed to retreat on Tuesday after President Xi Jinping made a market-calming speech. In response, White House adviser Peter Navarro said that the doors were open for trade talks.
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