US Stocks Show Signs of Volatility Amid Recession Fears

US equities began the week with volatility following a correction and a year-to-date high for the S&P 500 on Friday. By 2:30 PM ET, the S&P 500 was trading 1% higher and the Nasdaq Composite was up 0.8%.

The VIX is hovering around 21

• A value above 27.3 indicates heightened volatility.
• Current VIX at 19 suggests potential for increased volatility if Big Tech sells off or inflation data disappoints.
• Last week, the VIX reached 27.9 before a market correction occurred.
• For stocks to signal a low, elevated volatility must persist for months.

The S&P 500 is trading 19.9x forward earnings estimates

• S&P 500 currently trades around 20x projected earnings for the next year.
• Pre-2008 crash P/E was about 15x; during the crisis, it dipped to 10-12x.
• In 2022, amid recession fears, the S&P 500 traded around 15x forward earnings.
• Consumer sentiment fell 11% in March and is down 22% since December.
• Market may be approaching "vibe-cession" territory similar to 2022.

The Federal Open Market Committee meeting begins Tuesday, with expectations for steady interest rates. Uncertainty remains regarding how long this pause will last and what level stocks need to reach for intervention.