Odaily Planet Daily report: Despite the S&P 500 index surging this year and continued inflows of capital, historical seasonal selling periods, ongoing geopolitical tensions, and emerging signs of weak consumer demand are prompting Wall Street strategists to issue a wave of risk-aversion warnings.
The CBOE Volatility Index (VIX) dropped sharply to 14.2 last Friday, reaching its lowest level since 2026. The index, which measures expected market volatility over the next 30 days by tracking S&P 500 option prices, typically signals extreme market calm when it declines. Jonathan Krinsky, Managing Director and Chief Market Technologist at BTIG, noted that the U.S. stock market's performance in 2026 has been "exceptional." Since October last year, the market has never experienced a single day where the volume of declining stocks reached as high as 80%.
Quantitative trading giant Susquehanna described the current volatility reset as a "substantial" decline. The firm noted that cross-asset and geopolitical risks remain active, with the two-month implied volatility slightly rebounding to 13.5%, approaching levels seen before the Iran conflict erupted.
Wall Street institutions commonly view mid-August to mid-October as a historically volatile period for markets. According to BTIG’s statistical model, in every midterm election year since 1990, the equal-weighted S&P 500 Index has experienced at least a 7% drawdown from its average peak on August 18 to mid-October. (CNBC)