The S&P 500 Index is on a tear, proving skeptics wrong with its steady rise. With the economy on the mend, trillions of dollars are flowing into the economy, while the stock market is seeing its biggest rally in nine decades. In addition, people are using money from their 401(k) contributions to buy stocks, fueling the market’s upward trajectory.
While investors continue to fret about the market’s gloomy outlook, there are a few encouraging signs for investors. According to Chris Harvey, equity strategist at Wells Fargo, the S&P 500 could hit a record high this year. The CBOE Volatility Index, which measures the implied volatility of S&P options, is at nearly 29 levels on Friday, compared to the 17s a week ago.
The Federal Reserve Board has pumped trillions into the economy, enlarging balance sheets with assets, creating new dollars and buying junk bonds. This has helped keep hedge funds and marginal companies afloat. The Fed’s actions have created unprecedented levels of liquidity and risk in the stock market. But there are also signs of a correction. For example, on Friday, the CBOE Volatility Index jumped to a record high, and the S&P 500 gained more than 10 percent. This is a bearish sign of an imminent recession.
There are plenty of reasons to cheer for the S&P 500, and the latest news is further evidence of the strength of the market. The CBOE Volatility Index, a measure of the risk associated with trading options, dropped to a record low on Friday. A week ago, it was in the low teens. As a result, the odds of a positive return increased to seventy-five per cent.
The market’s recent momentum is one of the best reasons to be bullish. The market is already at a record high. The index is up by nearly 22 per cent in the first 10 months of 2021, and it is likely to continue to climb for the remainder of the year. However, it still has a long way to go. The odds of a positive return for a stock are higher than ever before.
The market is overcoming skepticisms. The S&P 500 has gained nearly 20 per cent in the first 10 months of 2021. With momentum, it may be able to hold on to its record-breaking run. Even more, money managers are taking more risk this year. They are boosting their S&P 500 with the hopes that they will earn a big profit in the next two months.