Wall Street Volatility Index Hits New Low Amid S&P 500 All-Time Highs

Wall Street's volatility gauge, the Cboe Volatility Index, hit a new low of 14.95 points, indicating investors are cutting their losses and abandoning bets against the S&P 500 Index. Realized volatility has fallen more than the VIX, but experts expect the gauge to rebound next month, citing historical trends and the potential for market moves due to thin trading volume during vacation months.

Wall Street's go-to gauge of fear and uncertainty, the Cboe Volatility Index (VIX), fell to 14.95 points on Thursday, indicating a calm market sentiment. This decline follows a period of relatively low volatility, as investors weigh earnings reports from major corporations and await developments in trade negotiations [1].

The VIX, often referred to as the "fear index," measures the market's expectation of volatility based on S&P 500 Index options. A reading below 20 typically indicates low volatility. Thursday's drop in the VIX comes as investors digest earnings from companies such as Alphabet and Tesla, and anticipate further trade developments, including potential deals with Japan and other countries [1].

The S&P 500 and Nasdaq Composite also hit record highs on Thursday, with the S&P 500 climbing nearly 0.3% to 6,379.54 and the Nasdaq Composite rising more than 0.25% to 21,107.83. This rally is being supported by positive economic data, trade deals, and an uptick in mergers and acquisitions (M&A) activity. JPMorgan's Global Head of Market Intelligence, Andrew Tyler, expects the market to continue its upward trajectory, driven by these factors and the intensifying meme-stock frenzy [2].

While the VIX has hit a new low, realized volatility has fallen even more than the VIX. Experts predict that the VIX may rebound next month, citing historical trends and the potential for market moves due to thin trading volume during vacation months. This could lead to increased volatility as investors return to the market after the summer break.

In summary, the VIX's decline reflects a calm market mood, driven by positive earnings reports and trade developments. However, experts warn that the market could experience increased volatility as investors return from vacation, potentially leading to a rebound in the VIX.

References:
[1] https://www.barrons.com/livecoverage/stock-market-news-today-072425/card/fear-index-slips-as-earnings-and-trade-soothe-wall-street-XsljoIhv1ICgoMXVbCGh
[2] https://stocktwits.com/news-articles/markets/equity/s-and-p-500-nasdaq-hit-record-highs-jp-morgan-says-the-rally-isnt-over/ch8zbsAR5HY