Stocks Sold Off as Fear Spiked, Then Steadied Into the Close
Yesterday started cautiously and turned worse before finding its footing. The VIX, Wall Street's fear gauge, climbed from 15.8 in the morning to 16.2 at midday, then settled at 16.9 by the close. That intraday rise signals sentiment shifted from calm to uneasy as the day wore on. The broader market sold off hard. Technology fell 2.2%, leading declines. That drop matters because tech carries heavy weight in most index funds you likely own. Valuations remain a concern. Stock prices relative to earnings sit higher than in roughly 77 to 79 out of every 100 months since 2006. That leaves little room for error if earnings disappoint. The Fear and Greed Index dropped from 45 to 35 in a single day, moving firmly into fear territory. Fear rising while valuations stay stretched is an uncomfortable combination for your portfolio. The 10-year Treasury yield held at 5.2%. Borrowing costs at that level keep pressure on expensive stocks and squeeze homebuilders, which fell 2.5% and sit 28% below their 52-week high. Not everything fell. Healthcare surged 2.5%, the best sector yesterday. Biotech slipped only 0.1%, showing clear resilience while the rest of the market sold off. Retail gained 0.4%, quietly bucking the decline. Oil and gas exploration fell just 1%, sitting only 1.5% below its 52-week high, the strongest technical position among watchlist ideas. The VIX closing at 16.9 is still below its one-year average of 18.1. Protective put options on broad index funds remain relatively cheap. Yesterday's sentiment shift suggests that window may not stay open long.
Source articles:
- Cheap Fear Gauge, Pricey Stocks: Lock In Protection Before Volatility Returns
- Fear Jumps, Valuations Stay Stretched: Time to Buy Cheap Protection
- Valuations Stay Stretched as Energy Leads and Bank Earnings Split the Market
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