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Stocks hope for gains before Fed's September meeting

Markets seek to reverse course ahead of the Fed’s September FOMC meeting, after 2 weeks of downtrends.Yahoo Finance Markets Reporter Jared Blikre joins to take a look at the market volatility index (^VIX), giving insights into how markets are anticipating the Fed’s next interest rate decision on Wednesday.

Video Transcript

And markets look for gains after two losing weeks as investors look ahead to the Fed's policy decision this week. Here to break down the latest market action, let's get to Yahoo Finance's Jared Blikre. Jared.

Hi, Josh. Let's go to the Wi-Fi interactive. We got that big Fed meeting on deck this week. I am looking at volatility, and specifically the VIX interesting price action over the last couple of days. This is a two-month chart, but I just want everybody to focus on the last two days. We actually hit a low, lowest day of the year, only Friday, and we have bounced back up. Now, inasmuch as VIX is a non-trending asset, it is a mean-reverting asset. You would expect it to go up and then down again. In fact, over the entire period that we can calculate the VIX going back to 1990, we do find some rather large spikes, but for the most part, we camp out in the lower end here. And in September and October, we actually do have a rising VIX. We do have a lot of market crashes in history that cause the averages to rise. And here I want to show you what usually happens over the year in the VIX. That would be the cyan line, and you can see the purple line here is what's happened this year. They closely pretty closely track each other, including that big spike in March. We've had some other calamities in the March era before. You think back to 2020, the pandemic, but nevertheless, I'm focused on what's happening right now. And here's where we are. Here's where the VIX is relative to what it usually does, and then, mid-October, it's usually much higher. So we could see a spike in the vike-- spike in the VIX. What would that come as, well, the big catalyst this week would probably be the Fed meeting, but it could be any number of one of critical economic reports regarding inflation or the farm payrolls report, which we'll get in a few weeks not to get too far ahead of ourselves. I also want to check out the volatility in the bond market. The 10-year has been screaming higher, and it's threatening to make new 15-year highs. Here's the 10-year T-note yield going back all the way to 1990 as well. And you can see how it's broken to the upside here, but I want to leave with the MOVE index because-- and this is like the VIX of the bond market. You can see we are actually on the way down. They're not the lowest levels of the year. Here's the year-to-date where you see testing those February lows but heading lower nonetheless. So, stocks heading high-- excuse me, the stocks VIX heading higher, and the bonds VIX heading lower. We'll have to see how it resolves itself, but the potential, the potential for a market downturn is increased over the next couple of weeks, guys.

All right. Love seeing this many Yahoo Finance reporters, the New York Stock Exchange. Jared--

You bet.

Thank you, sir.