Wall Street’s fear gauge sank to a post-pandemic low on Thursday, 8 June 2023, and the man running money at DWS Group had a blunt explanation. “What you are really seeing in the vol market is an unwillingness to engage,” said David Bianco, the firm’s chief investment officer for the Americas.
Stocks still closed higher. A bounce in technology shares helped U.S. markets win back some of their earlier momentum. The CBOE Volatility index, the usual measure of how nervous investors are, hit its lowest level since the pandemic began.
A Fed decision on the horizon
The calm had a clear cause: a crowded calendar the following week. The Federal Reserve was due to meet on June 13 and 14, and traders were pricing a 73% chance that it would leave rates in the current 5%-5.25% range. They saw a 50% chance of an increase in July. On the first day of the meeting, the Labor Department was due to release inflation figures. Economists expected consumer prices to have dipped slightly in May while core prices held steady.
Data on Thursday gave bond traders something to chew on. Weekly unemployment claims rose sharply, a sign the labor market might be weakening, and the two-year Treasury yield slid from a one-week high to 4.51%.
Winners and losers
Consumer discretionary led the 11 major S&P sectors. Real estate and energy fell, the latter pulled down by cheaper oil. Gains and losses were close to even across exchanges: advancing stocks beat decliners 1.16 to 1 on the New York Stock Exchange and 1.02 to 1 on the Nasdaq.
Adobe rose 4.95% after Piper Sandler lifted its price target to $500 and the Photoshop maker said it was pushing its “Firefly” AI technology to large corporations. Lucid, the electric luxury carmaker, fell 1.88% after the head of its China operations said the company was preparing to enter the world’s biggest car market.
The sharpest drop belonged to GameStop. On Wednesday evening it announced that it had fired chief executive Matt Furlong, who had held the job since 2021, and named billionaire investor Ryan Cohen executive chairman. The company gave no reason. It also reported a first-quarter net loss of $50.5 million, against a loss of $157.9 million a year earlier, and revenue of $1.24 billion, down from $1.38 billion. It cancelled its usual earnings call. The stock fell 17.89% on Thursday.
Sources
- Wall Street Closes With Historically Low Volatility Before A Busy Week (Business Outreach, rewrite of Reuters market wrap)
- GameStop fires CEO and names Ryan Cohen executive chairman (CNN Business)
