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The Wall Street Volatility Index has hit a record and fallen rapidly, leading to a more optimistic outlook for the stock market in 2025
Stock Science7 months before
Summary：The Chicago Board Options Exchange Volatility Index (VIX) has rapidly fallen from a high to a historically rare level in less than a month, indicating a significant easing of Wall Street panic. Driven by factors such as the 90 day tariff easing agreement reached between China and the United States and the decline in inflation expectations, market confidence is gradually recovering. Goldman Sachs and several market experts have raised their year-end expectations for the S&P 500 index in 2025, demonstrating positive expectations for future economic and stock market growth.
Asia Pacific Financial News——Recently, the panic in the Wall Street market has experienced an unprecedented rapid decline. According to Bespoke, an investment research firm, from April 10th to May 12th, the Chicago Board Options Exchange Volatility Index (VIX) recorded its fastest ever decline, plummeting from above 40 to below 20.
Historical data shows that it is extremely rare for VIX to fall from a high to a low in less than 100 days, with only four occurrences. Especially on April 8th, when Trump announced the "Liberation Day" tariffs and triggered a stock market bottom, VIX surged to a peak of 52.33, but by Wednesday of this week, it had fallen to around 18.22.
Last month's VIX rose to its highest point since the outbreak of the pandemic, reflecting high market concerns about the trade war and economic outlook. However, after the United States and China agreed to implement a 90 day tariff easing measure, Wall Street sentiment quickly warmed up, driving a significant rebound in the stock market and easing some concerns about the impact of the trade conflict.
Bespoke co-founder Paul Hickey pointed out that investors may show excessive optimism about the progress of trade negotiations, but at the same time reminded the market to remain vigilant about changes in tariff policies: "The cancellation and re implementation of tariffs can happen, and investors need to be aware of this
Nevertheless, Hickey emphasized that the significant decline in VIX this round conveys a positive signal for the stock market in 2025. According to historical data, whenever the VIX falls more than 20 points within 100 days, the S&P 500 index typically experiences an increase in the following year.
He added, "Although it is difficult for the market to achieve a cumulative increase of over 20% over the past two years this year, there is still significant room for growth
The optimism of Wall Street analysts has also increased. Goldman Sachs raised its 2025 year-end target for the S&P 500 index this week from 6200 points to 6500 points, mainly based on reduced uncertainty, lower inflation expectations, steady growth in corporate profits, and recovery of market confidence.
Senior market analyst Ed Yardeni has also raised his year-end target from 6000 points to 6500 points, citing improved expectations for US economic growth.
Overall, although there are still variables in trade policies, market participants are generally optimistic about the future performance of the stock market, and their risk appetite has increased.
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