The spread between big tech volatility and the rest of the market, measured by Cboe’s VIXEQ-VIX index, is reversing from record highs reached this summer when AI-driven tech giants moved hundreds of billions of dollars in market cap daily while the rest of the market stagnated. U.S. Treasury bonds are now usurping AI optimism as the primary driver of the stock market, with the 10-year yield approaching a three-year high of 5 percent. Crude oil futures are back above $100 per barrel for the first time since May, and energy stocks are outperforming technology as the best-performing sector of the year, with the State Street Energy Select Sector SPDR ETF (XLE) up 43 percent. Implied volatility collapsed in 18 of 19 stocks tracked by Nations Indexes’ VolDex metric, as investors shift focus to macroeconomics and policy as primary market catalysts, including resurgent inflation and the Fed’s September 16th meeting.
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