Investors are as sanguine about the stock market as they have been in almost a quarter of a century, according to one indicator, despite months of global political turmoil, showing comfort in strong corporate earnings and signs that the jobs market is humming, The Wall Street Journal reported yesterday. Sunday’s election in France of centrist candidate Emmanuel Macron as president helped remove a major market overhang and gave investors confidence that stocks are unlikely to face a big selloff anytime soon. The relative calm drove a widely watched measure of anxiety, the CBOE Volatility Index, or VIX, to its lowest level since 1993 on Monday. On Friday, the S&P 500 and Nasdaq Composite both hit new highs and were little changed Monday. Some investors interpret the VIX’s decline as a contrary indicator of where the market will go. Their view is that the VIX’s slumber suggests investors have grown too complacent. Some say that investors are turning to other financial instruments to protect against a downdraft in stocks. Former Federal Reserve Gov. Kevin Warsh warned that market risks haven’t vanished. “I would not take comfort; I would take fear,” he said of the VIX’s low level. The VIX, which typically moves opposite from stocks, fell to 9.77 Monday, the lowest close since Dec. 27, 1993. The index at one point Monday dropped as low as 9.67.
