VIX Index (INDEXCBOE: VIX) is a measure of the market volatility in the S&P 500 index. Due to the increasing investor confidence in the market and the decreasing inflation, VIX fell to its lowest level since 2020 this year. However, after consolidating around 12.7 points, the index has started to show some gains.
Despite Wall Street extending its losses on Wednesday, the VIX index closed with a 0.19% decline. On Thursday, the index opened lower as the stock futures started to rise. At press time, the volatility index was down 1.76%, while the e mini S&P Futures were up 0.52%.
Major Caps Tumbled On Wednesday
The pullback in the stock market, which began last week, seems to have turned into a deeper correction. Since the start of the week, the S&P 500 index has been down 0.23%. The index is set to have a second consecutive red week after a rejection from the 4,600 points level.
After a 28.28% surge last week, the VIX index has slid 8.48% this week. This suggests that the investors are optimistic about a rebound in the US stocks in the coming days. In the past ten days, major US stocks, like Apple, Tesla, Meta, etc., have had a strong pullback.
VIX Index Forecast Amid July CPI Report
The CPI data for July 2023 is set to be released today. The data will show an increase or decrease in inflation in the United States. If the report shows an increase in inflation more than the forecasted 3.3%, the stocks may experience a sell-off. This can cause a surge in VIX which rises when there is fear and uncertainty in the markets.
After hitting its multi-year lows in 2023, the volatility index appears to be gearing up for a major move. The US equities have been rallying since the start of this year. I won’t be surprised if the ongoing correction deepens in the coming weeks amid a weakening job market.
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