710
2 months ago
Daily Spotlight: Market Calm, Earnings Take Center Stage
Summary
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After a spike in market volatility last week (as geopolitical issues dominated headlines during the Davos conference), the closely watched VIX Volatility Index has declined back below its historical average of 20 and appears calm as the 4Q EPS season kicks into high gear. Meanwhile, stock prices continue to crawl higher and the S&P 500 has been flirting with all-time records. We can't say that the recent jump in the VIX was entirely a surprise. Indeed, in our 2026 Market Outlook, we noted that investor complacency was high, the upcoming Fed chairman transition could be rocky, the AI innovation revolution may stall, and that stock valuations were susceptible in the event of a sell-off in the Information Technology sector. That was our bearish case. Our base case calls for another year of growth in the U.S. economy (and no recession), a modest decline in interest rates, and double-digit EPS growth. Since each of our base-case planks currently is in place, we think there's reason to expect that equity prices can continue to push ahead. Back to the market, the current "fear index" reading is south of 17.0, which is well below historical average and consistent
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After a spike in market volatility last week (as geopolitical issues dominated headlines during the Davos conference), the closely watched VIX Volatility Index has declined back below its historical average of 20 and appears calm as the 4Q EPS season kicks into high gear. Meanwhile, stock prices continue to crawl higher and the S&P 500 has been flirting with all-time records. We can't say that the recent jump in the VIX was entirely a surprise. Indeed, in our 2026 Market Outlook, we noted that investor complacency was high, the upcoming Fed chairman transition could be rocky, the AI innovation revolution may stall, and that stock valuations were susceptible in the event of a sell-off in the Information Technology sector. That was our bearish case. Our base case calls for another year of growth in the U.S. economy (and no recession), a modest decline in interest rates, and double-digit EPS growth. Since each of our base-case planks currently is in place, we think there's reason to expect that equity prices can continue to push ahead. Back to the market, the current "fear index" reading is south of 17.0, which is well below historical average and consistent
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AI Description
The article discusses the recent stabilization in market volatility following a spike, with a focus on the upcoming earnings season. It highlights the VIX Volatility Index's return to calm and the S&P 500's approach to record highs.