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Stock Market Returns to Calm After Epic Jump


Wall Street’s fear gauge has been getting less scary by the week.

The Cboe Volatility Index, or VIX, closed below its 200-day moving average last Wednesday for the first time since January and has remained there since.

The VVIX, a measure of how volatile the VIX itself is, dipped under its average weeks ago. The VVIX, also known as “the VIX of the VIX,” is based on options prices on the volatility index.

The fear gauge has fallen in each of the past five weeks, the longest streak since a six-week stretch in the summer of 2016, according to The Wall Street Journal’s Market Data Group.

The VIX tends to fall when stocks rise. It uses options on the S&P 500 index to spit out a measure of expected stock swings over the next month.

The prospect of calm in markets marks a sharp reversal from the weeks of turbulence since early February, when U.S. stocks slipped into correction territory.

Despite the recent drop, investors anticipate more volatility for all sectors than they did a year ago, seeing the biggest swings in energy companies.

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#wsj-ai2html-1526233672861 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1526233672861aiAbs position: absolute; .wsj-ai2html-1526233672861aiImg display: block; width: 100% !important; #wsj-ai2html-1526233672861 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-4-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 25px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-4-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-4-2 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Exepected volatility by sector*

May 10, 2017

May 10, 2018

Consumer staples

Utilities

Consumer disc.

Health care

Technology

Materials

Industrials

Financial

Telecom

Energy

0%

20

5

10

15

#wsj-ai2html-1526233672861 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1526233672861aiAbs position: absolute; .wsj-ai2html-1526233672861aiImg display: block; width: 100% !important; #wsj-ai2html-1526233672861 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-3-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 25px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-3-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-3-2 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Exepected volatility by sector*

May 10, 2018

May 10, 2017

Consumer staples

Utilities

Consumer disc.

Health care

Technology

Materials

Industrials

Financial

Telecom

Energy

5

20

0%

10

15

#wsj-ai2html-1526233672861 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1526233672861aiAbs position: absolute; .wsj-ai2html-1526233672861aiImg display: block; width: 100% !important; #wsj-ai2html-1526233672861 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-2-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 25px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-2-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-2-2 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Exepected volatility by sector*

May 10, 2017

May 10, 2018

Consumer staples

Utilities

Consumer disc.

Health care

Technology

Materials

Industrials

Financial

Telecom

Energy

15

20

0%

10

5

#wsj-ai2html-1526233672861 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1526233672861aiAbs position: absolute; .wsj-ai2html-1526233672861aiImg display: block; width: 100% !important; #wsj-ai2html-1526233672861 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-1-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 25px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-1-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1526233672861 .wsj-ai2html-1526233672861-aiPstyle-1-2 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Exepected volatility by sector*

May 10, 2017

May 10, 2018

Consumer staples

Utilities

Consumer disc.

Health care

Technology

Materials

Industrials

Financial

Telecom

Energy

10

15

20

0%

5

*Based on corresponding sector ETFs

Source: Trade Alert

Four of the seven most volatile S&P 500 stocks in roughly the past month…

…are among the top seven in expected volatility.

Some say the current expectations for future volatility are too low, after the S&P 500’s gyrations this year. The equity index has gained or lost at least 1% this year 32 times, the most since 2009. Time will tell whether the recent calm will persist.

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com

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