By Saqib Iqbal Ahmed
New York (Reuters) as Wall Street draws the curtain on a tumultuous quarter in which shares have set a record high before they have a tumbling, investors are confronted with a mountain of policy uncertainty that the outlook for the coming quarters of clouds.
The S&P 500 Index ended the quarter with 4.6%, the worst first three months of a year since the first quarter of 2022.
Investors, who started the year with high expectations of pro-growth policy of the Trump administration, have escaped due to a barrage of tariff-related headlines.
The decreasing consumer confidence, in combination with concern that President Donald Trump’s protectionist trade policy could cause inflation, the fear of a potential recession or even stagflation.
Investors assess the damage to the stock market, also to the biggest winners of recent years, and look at the history to gauge whether a turn in sentiment can be around the corner.
Peak Fear
Despite all the weakness of the stock market, options -based size for investor fear, the CBOE Volatility Index, no Cracking 30 – has a level associated with increased fear.
Investors often look at this so -called anxiety meter for a contrary sign that Bearish sentiment may have been overloaded.
In the last 10 corrections of the S&P 500 that did not evolve to a bear market, the VIX rose in the 30s in all, with an average peak level of 37.
Because the VIX is still floating below 30 points, some analysts are worried that the worst of the sale may not have taken place.
“The bump in Vix, remember that it was almost 17, only a few sessions ago, tells me that there is again a relatively large demand from Volatility Protection Institutions,” said Steve Sosnick, main strategist at interactive brokers.
“They are still not in panic, so it is not clear that we have seen real capitulation,” Sosnick said.
May seven
The sale has been particularly brutal for the “beautiful seven” shares, which in the past raised the benchmark index to register highlights.
On average, shares from Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta platforms and Tesla have fallen around 16% this quarter.
The heavy weighting of the shares in the S&P 500 underperformance means that the market hood – weighted index has left the S&P 500 of the equal weight – a proxy for the average shares in the index – with almost 3.5 points, the third largest performance for the S&P 500 in the last 16 quarters.
Nevertheless, the influence of the beautiful seven shares across the wider market remains largely intact – their combined weight in the S&P 500 is 30.5%, a decrease of 33.5% at the start of the quarter, according to LSEG data.
