Highlights of the week ended May 12, 2017 and a look ahead to this week’s expected announcements and potential market-moving activity.
- U.S. equities finished mixed for the week: The Dow Jones Industrial Average (DJIA) closed 110 points lower, or fell 0.53%, to 20,897. The Standard & Poor’s 500 (S&P 500) index lost 8 points, or fell 0.35%, to 2,391. However, the Nasdaq closed last week 0.34% higher at 6,121.
- Market Volatility
The CBOE Volatility Index, or VIX, a widely watched measure of investor expectations for market volatility one month in the future, hit its lowest level (9.77) since December 1993 – dropping as low as 9.67 at one point during the week. Some explanations proffered for these low levels include increased optimism about the American economy driven by expectations of tax reform, infrastructure spending, cutback in regulations and other “pro-growth” policies from the new administration. In addition, U.S. companies just reported their best quarterly profits in five years, with job numbers continuing to show strength – both of which might have contributed to these depressed volatility levels. It is noteworthy that these low volatility levels are also being observed in fixed income markets, with volatility in Treasuries falling to the lowest level since October.
CBOE Volatility Index
- Important reports/items for the upcoming week include Housing Starts for April, The Philadelphia Business Survey, The Conference Board Leading Indicators Index, and Industrial Production numbers.