The Stock Market’s Day of Reckoning Is Coming

The Stock Market’s Day of Reckoning Is Coming

It might not feel like it, but the S&P 500 index is flat over the past month. It ticked up 1.76% this past week, to close at 3185.04—less than five points away from its level on June 10. But that obscures plenty of volatility under the surface: The index has had larger daily moves than its overall monthly change in all but one trading session in the past month. The Cboe Volatility Index, or VIX, has stubbornly remained close to 30 points, in the top 10% of historical readings. It’s a dynamic that Evercore ISI strategist Dennis DeBusschere calls a “violently flat” market. The coming month should be just as violent, but there’s a good chance it won’t be flat. The Dow Jones Industrial Average rose 248 points, or 0.96%, this past week, to 26,075.30, while the unstoppable Nasdaq Composite rose 4.01%, to 10,617.44. The week was a microcosm of the past month’s market action, with stocks falling on days following record U.S. coronavirus cases and rising on less-bad days, including Friday’s gains on a positive incremental analysis of remdesivir data from Gilead Sciences (ticker: GILD). Through it all, tech shares continued to rise. The long-tail implications of the coronavirus and its impact on the economy are significant and inherently unpredictable. Hence the violent daily market moves on what seems like at most incremental news. But the swings have been amplified by the vacuum of other factors to influence ...
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