Key Takeaways
- Markets Getting Quiet
- Inflation In Line With Expectations
- Volatility Contracting
As we head deeper into May, markets have a mid-summer feel to them. With the exception of retail stores, most of the major earnings are behind us. The Fed appears to be in wait and see mode and investors appear less on edge following a turbulent end to the first quarter.
With little progress made on budget negotiations and pending economic data, stocks were little changed Tuesday. The S&P 500 fell 0.5% while the Nasdaq Composite was down 0.6%. It was also the narrowest trading range for stocks in nearly 18 months.
The S&P 500 remains in its recent trading range with a ceiling of 4200. The VIX, which hit a recent high of just over 30 back in March, is now well below 20, closing on Tuesday at 17.71. If there is going to be something investors will key on this week, it will be today’s Consumer Price Index (CPI) and tomorrow’s Producer Price Index (PPI).
Economists were expecting today’s CPI to show prices increased 0.4% in April from March. For the year, expectations were for an increase of 5%. The actual numbers were largely in line with expectations, giving the Fed more reason to stand pat when they meet in June.
May is often a time when the weather warms up and if you live in places like Chicago, markets begin taking a back seat to more important things (like golf and baseball). With the VIX below 17 in premarket trading, it would appear markets are unconcerned about the immediate future. However, as I’ve said in the past, it’s when things get quiet that something unforeseen can quickly change the narrative. Therefore, as always, I would stick with your investing plan and long term objectives.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
Read the full article here
