S&P 500 Ends Losing Streak as Volatility Drops Ahead of Central Bank Meetings
The S&P 500 index ended its four-day losing streak on Friday, rising by 0.86% to close at 7,656.98. This increase came as volatility levels dropped, with the one-day gauge decreasing by 25.66% to 12.98 and the 30-day measure declining by 11.21%. The VIX closed at 15.84, while front-month VIX futures settled at 16.66, reflecting a slight premium due to a steep contango in the term structure.
The skew indicator heightened to 154.49, signaling investor caution despite recent bullish performance. Market conditions have shifted to a low volatility bull regime, significantly influencing equity trading patterns. The upcoming week is crucial with major financial events on the horizon, including three critical central bank meetings: the Federal Reserve, Bank of England, and Bank of Japan.
The market is reacting to headline events, particularly the disruption caused by Saudi Arabia's closure of its East-West crude pipeline after drone attacks, which significantly affects global oil supply. In the U.S., consumer prices saw a rise of 0.4% for August, raising the likelihood of a 25 basis point increase from the Fed, now priced at an 87% probability.
Market snapshots from Friday highlighted a composite gain across major indices: the Dow Jones rose by 0.98%, while the Nasdaq 100 increased by 0.91%. Notable stocks, including Dell and Hewlett Packard Enterprise, surged by approximately 12% following Oracle's promising cloud results.