Which matters more to stocks: the bond market or AI risks? The volatility gauge might offer an answer
Volatility measured by the Cboe VIX Index jumped to 18 Monday.
TL;DR
- Options traders are prioritizing AI-related risks over interest rate hikes as the main threat to the U.S. stock market.
- The Cboe VIX Index jumped to 18, with a surge in options trading, particularly call options, indicating heightened concern.
- Semiconductor and data-center stocks have dragged on the S&P 500 Index.
- Despite increased odds of a Federal Reserve interest-rate hike, equity prices have firmed.
- Volatility in U.S. Treasuries, measured by the MOVE Index, has risen significantly, but this does not seem to be a primary factor for stocks.
- Market participants believe the Federal Open Market Committee's decisions are largely set, and AI's current profitability is a key focus.