Market Optimism: Stocks Approach Year Highs, Volatility Dips and Fed Hike Expectations Diminish
Market Optimism: Stocks Approach Year Highs, Volatility Dips and Fed Hike Expectations Diminish
By:JJ Kinahan
Equities are surging as volatility dips, and the S&P and Nasdaq near year high. Oil and gas prices are plunging, while gold and silver rally. Where next?
- Markets are sending signals that inflation is cooling; divergence between precious metals is surging and there’s bond market movement.
- Equities are surging as volatility dips, and the S&P and Nasdaq near year high. Meanwhile, the Russell 2000 performance is noteworthy.
- Oil and gas prices are plunging, while gold and silver rally. The market expects an end to rate hikes.
Over the past month, economic data indicates a cooling inflation trend without hinting at an impending recession. This morning's housing starts figure, slightly below projections, perpetuates this trend. Yesterday's market performance, however, showed little change. The S&P 500 rose by less than 0.1%, while the Nasdaq Composite registered a marginal increase. This week, the S&P climbed 2%, and the Nasdaq slightly exceeded a 2% uptick.
While stocks remained subdued yesterday, the commodities market experienced heightened activity. Crude oil, which peaked at 95 in August, has taken a nosedive since then, plummeting over 5% on yesterday to nearly $73 per barrel, marking its fourth consecutive week of losses. Similarly, natural gas also dipped, concluding the day at $3.06, down by month-end, nearly 12% from its recent highs, raising concern among oil traders. Meanwhile, gold and silver shone amidst this volatility, with gold surging 1% to close at $1,987.30 an ounce and silver rising over 1.5% to $23.93. In the past month alone, gold prices have climbed by 8%, and silver by an impressive 15%.
All that glitters
The surge in precious metal prices, contrasting with bond market movements, is a significant observation. While the bond market typically displays minimal fluctuations because of its liquidity, the yield on the 10-year note plummeted by 60 basis points in less than a month, a staggering shift. This divergence between bonds rallying, seemingly anticipating a rate cut, and the precious metal rally, suggests otherwise. Nevertheless, the market consensus appears to signal the end of rate hikes. The probability of a rate hike in December, as per the Chicago Mercantile Exchange, is less than 0.5%, a significant drop from the 9% forecast just last week.
Recent equity market surges have been striking, with both the S&P 500 and Nasdaq hovering merely 2% below their year-to-date intraday highs. Market volatility is approaching some of its lowest levels this year, evident in the VIX's premarket dip of 3% to 13.90. Furthermore, the Russell 2000's impressive 10% ascent from its recent year-low at 1639 suggests a broadening participation of stocks in the upward moves, which augurs well for investors, especially considering its underperformance earlier this year.
Lower trading volume
Anticipating lighter volumes today and with Thanksgiving approaching, a continuing trend of diminishing market volumes is expected. However, subdued volumes don't necessarily mean quiet markets, often leading to unexpected market movements. It's crucial to remain aligned with your investment strategy and long-term plans amid these fluctuations.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2025 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.