Volatility Reminds Investors That It's Still Around

For the past few weeks, markets had been following a pattern of volatility - small spikes on Monday with easing throughout the week to settle lower by Friday.

Last week, the convergence of a few events caused a spike in the VIX on Friday. The expiration of $2.7 trillion in options, which typically occurs on the 3rd Friday of the month, added to a disappointing Consumer Sentiment number, and a story about another coronavirus found in Wuhan. The S&P 500 Index lost 1.7% alone on Friday. Historically speaking, equities tend to struggle in the 2nd half of February, so Friday's results shouldn't come as much of a shock. So far this morning, futures show calm activity among equity traders. Time will tell if last Friday was an anomaly.

Before Friday's action, market breadth had actually improved.

In 2023 & 2024, fewer than 40% of stocks in the S&P 500 Index were actually out-performing the index. So far in 2025, close to half the index is out-performing. We could be seeing a change in leadership among the top holdings of the broader index. From a historical standpoint, the average bull market is 67 months in length. The current bull market is in its 28th month, which is less than half the length of an average bull market. There have been shorter bull markets in history, but for the current cycle to end it would make this the 3rd shortest bull market since 1949. As we've stated over the past few weeks, risk is the cost of investing, so spikes in volatility shouldn't be surprising.

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