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“There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market to-day has happened before and will happen again.” – Edwin Lefevre, Reminiscences of a Stock Operator
After some of the individual stock moves we have seen in the last few days and continue to see this morning, it seems odd to see futures for the S&P 500 only modestly lower. The pace of earnings season has really started to pick up steam in the last 24 hours, and the next 24 hours will be busy as well. So far, companies have been reporting strong results, but given the run-ups we’ve seen in stocks leading up to the reporting period and the high level of expectations, it’s not too surprising to see investors selling the news.
As if all the earnings news wasn’t’ enough to deal with, there’s also a tone of economic date to navigate through over the next two days as well, including today’s releases of Jobless Claims, Q4 GDP, Leading Indicators, New Home Sales, and the KC Fed report.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, Economic data out of Europe, an update on the latest national and international COVID trends, and much more.
Yesterday was an interesting day in the market. Interesting may be an understatement, but our point is that while the S&P 500 was down just over 2.5%, the upward move in the VIX was suggestive of a much larger downside move. The VIX’s massive upside move of 14.2 points Wednesday was the 17th day in the index’s history that it jumped ten or more points in a single day. On those days, the S&P 500’s average decline was 6.27% (median: 5.89%). Of those 17 days, yesterday’s 2.57% decline ranks as the smallest decline of them all. Even on the days where the VIX rose by less than it did yesterday but was still up more than 10 points, the S&P 500’s median decline was 5.28%. The smallest one-day decline of those days was -3.5% – nearly a full percentage point more than Wednesday’s decline. Based on the S&P 500’s performance on prior days where the VIX had a large one-day increase, yesterday there was a disconnect between sentiment in the market and the options market.