VIX Hits 3-Month High: Market Turns To Stocks Braving 'Last Mile In The Inflation Battle'
Portfolio Pulse from Neil Dennis
Following a surprise inflation reading, U.S. equity markets plunged, with the CBOE VIX Volatility Index spiking to a 3-month high. The ProShares Vix Mid-Term Futures ETF (VIXM) and SPDR S&P 500 ETF (SPY) saw significant movements. Analysts suggest a market correction is due, with a shift from growth stocks to value stocks like utilities and energy. The Utilities Select Sector SPDR Fund (XLU) and the Energy Select Sector SPDR Fund (XLE) could benefit, as could aerospace and defense sectors.
February 14, 2024 | 1:58 pm
News sentiment analysis
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NEGATIVE IMPACT
SPY lost 1.4% tracking the S&P 500 Index's decline following the inflation news.
SPY's movement is directly tied to the S&P 500, and the index's decline due to inflation concerns directly impacted SPY's performance.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 90
NEUTRAL IMPACT
VIXM spiked 2.2% following the inflation news but saw a pre-market decline of 1.6% the next day.
The initial spike in VIXM reflects the market's reaction to inflation, but the pre-market decline suggests uncertainty about the persistence of this trend.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
XLE, holding top oil stocks like Exxon Mobil and Chevron, was lower but may gain as investors rotate into energy stocks.
The shift towards energy stocks during inflationary periods, coupled with XLE's holdings in top oil companies, positions it for potential gains.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 80
POSITIVE IMPACT
XLU was down with the market but could bounce back if the equity sell-off persists, benefiting from a shift to value stocks.
XLU's potential rebound is based on the historical trend of utilities performing well during times of market volatility and inflation.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 80