Stocks experience their longest stretch without a 2% decline since the financial crisis

Wall Street’s rise to record highs has been accompanied by conspicuously low volatility.

THE S&P500 That’s 377 days without a 2.05% decline. This is the longest run for the benchmark index since the Great Financial Crisis, according to FactSet data compiled by CNBC. The index has also not seen a gain of at least 2.15% during this period.

The market lull comes as investors rush into large-cap technology stocks, such as Nvidia, betting that artificial intelligence will boost profits. Year to date, the S&P 500 is up more than 14%. Expectations of Federal Reserve rate cuts also supported the broader market index in 2024, as new data showed inflation moving closer to the central bank’s 2% target.

“At a high level, clouds of macroeconomic uncertainty have dissipated over the past 12 months as falling inflation has provided much-needed clarity on the future direction of monetary policy,” said Adam Turnquist , chief technical strategist at LPL Financial. “The evolving narrative from rate hikes to rate cuts to recessions to economic resilience helped drive the VIX to multi-year lows, ultimately shifting the context for a regime’s actions from low volatility to a regime of high volatility.

Many investors consider that CBOE Volatility Index (VIX) the de facto fear gauge on the street. Last month, it reached its lowest level since November 2020. On Friday, it was trading around 13, close to all-time lows.

“(T)he low VIX reflects complacency in the options market, with the VIX at a three-year low,” said Joseph Cusick, senior vice president and portfolio specialist at Calamos Investments. “This makes sense since institutions are actively hedging themselves; there is no urgency to sell underlyings with these insurance products in place.”

It is unclear how long this period of low volatility will last.

In 2017, the S&P 500 had only eight daily movements of more than 1%, while the VIX fell to an all-time low below 9. The following year, however, volatility returned to the market and the VIX jumped above 50 before easing.