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2w ago

VIX Drops to Pre-Pandemic Levels as US-China Tariff Pause Fuels Market Optimism

The stock market's fear gauge has returned to below its 10-year average, equity prices have rebounded, and analysts have raised S&P 500 year-end forecasts to 6,500.

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Overview

  • The CBOE Volatility Index (VIX) has fallen to 18.0, below its 10-year historical average of 20, signaling reduced market fear.
  • The VIX experienced its fastest-ever 21-day decline, dropping from above 40 to below 20, following a 90-day US-China tariff pause.
  • Equity markets have recovered most of their losses, with the S&P 500 turning positive for the year after weeks of heightened volatility.
  • Goldman Sachs and Ed Yardeni have revised their year-end S&P 500 forecasts upward to 6,500, citing improved investor sentiment and economic growth expectations.
  • Historical trends suggest sharp VIX declines often precede sustained stock market gains, though analysts caution that renewed tariff risks could disrupt progress.