While the US stock market hits new highs, the volatility remains unusually low. Investors are paying attention to the trend of the VIX index

While the US stock market continues to hit new highs, volatility remains unusually low. According to the data obtained by the Wisdom Financial APP, the S&P 500 Index has not experienced a drop of more than 2.05% for 377 consecutive days, the longest period since the financial crisis. During this time, the index has also not seen an increase of at least 2.15%. As investors flock to giant tech stocks like NVIDIA (NVDA.US), the market has entered this period of calm, betting that artificial intelligence will boost profits. As of now, the S&P 500 Index has risen more than 14% year-to-date. Expectations of a rate cut by the Federal Reserve in 2024 have also supported broad market indices, as new data shows inflation nearing the central bank's 2% target. "From the peak of macro uncertainty, the past 12 months have provided much-needed clarity for the future path of monetary policy as inflation has softened," said Adam Turnquist, Chief Technical Strategist at LPL Financial. "From rate hikes to rate cuts, from recession to economic resilience, these changes have helped drag the VIX index to multi-year lows, ultimately shifting the stock market backdrop from high volatility to low volatility." Many investors view the CBOE Volatility Index (VIX) as the true fear index of the US stock market. Last month, the index hit its lowest level since November 2020. Last Friday, the index traded around 13, close to historical lows. Joseph Cusick, Senior Vice President and Portfolio Specialist at Calamos Investments, said, "The low VIX reflects complacency in the options market, as VIX has been at multi-year lows, which is reasonable as institutions have been actively hedging; with these insurance products in place, there is no urgency to sell." It is currently unclear how long this period of low volatility will last. In 2017, the S&P 500 Index recorded only eight days with intra-day fluctuations exceeding 1%, and the VIX index fell to historical lows below 9. However, the following year saw a return of volatility to the market, with the VIX index soaring above 50 before easing