All told, the Nasdaq 100 is down 0.2% this month compared with a 3.5% gain in the S&P 500, making the gap between two the biggest since April 2016. This, in turn, is influencing traders’ expectations of future price swings. The Cboe NDX Volatility Index is hovering near 30, compared with 21 for the VIX Index, with the spread between them at a level last seen in September.
To Glenmede’s Michael Reynolds, this means volatility is here to stay.
“We were at some pretty historical levels of growth outperformance of value even before the pandemic started, and the pandemic actually really accelerated that,” Reynolds said by phone. “We’re sort of seeing the opposite happening now, where we’ve seen some pretty material increases in interest rates and the growth stocks showing a good amount of sensitivity to that rise in interest rates.”
-With assistance from Claire Ballentine, Vildana Hajric and Lu Wang.
This article was provided by Bloomberg News.