NEW YORK – The S&P 500 ended flat on Monday after briefly touching a record high, while Wall Street’s “fear gauge” dropped to its lowest in over two decades following centrist Emmanuel Macron’s victory in the French presidential election.
The CBOE Volatility index dropped 0.8 point to close at 9.77, its lowest since 1993 as investors took comfort from Macron’s victory, as well as from strong quarterly reports in recent weeks.
A declining VIX typically indicates a bullish outlook for stocks, but the extreme lows the index has touched are sounding caution for some stock investors.
“It’s been here before, but not much lower than this,” said Donald Selkin, chief market strategist at Newbridge Securities in New York. “It’s signalling that something negative is in the works.”
Seven of the 11 major S&P sectors dipped, with the materials index down 0.91 per cent and energy rising 0.7 per cent on the back of higher oil prices.
The euro hit a six-month high against the dollar after Macron comfortably defeated far-right nationalist Marine Le Pen, who had threatened to take France out of the European Union.
“We remain largely constructive of the equity market and view that the path of least resistance is higher,” said Bill Northey, chief investment officer at Private Client Group of US Bank. (Reuters)
