For all the pain that has piled up in the US stock market, one thing has been in surprisingly short supply: Fear.
Virtually every corner of Wall Street is being rattled by worries that rising interest rates will drive the economy into a recession, spurring large price swings in everything from junk bonds to foreign currencies. But the CBOE Volatility Index, the so-called fear gauge of stock-investors’ sentiment, is holding well below levels seen in past bear markets.
Options strategists and bankers cite a simple reason: The S&P 500 has been staging a long, orderly descent from the record level hit at the start of the year as the Federal Reserve pulls back its flood of pandemic-era stimulus. That differs from shock-driven crashes like the ones caused by Covid-19 in March 2020 or the collapse of Lehman Brothers Holdings Inc. in September 2008, both of which sent the VIX surging as investors sought to hedge the risk of wild market swings.
