VIX hits 52.3, a rare occurrence since 1990, signaling potential monster rally
From Yahoo Finance: 2025-04-19 04:06:00
The S&P 500 is 14% below its record high after President Trump announced tariffs on China, Canada, and Mexico in February. The 10% universal tariff and reciprocal tariffs unveiled in April caused the market to crash, with a 12% drop in five days.
Stock market volatility peaked with the VIX hitting 52.3 on April 8, a high since 1990. However, similar readings have led to monster 12-month returns for the S&P 500. The VIX measures expected stock market volatility based on S&P 500 options prices, moving opposite to the S&P 500.
Since 1990, the VIX has closed above 50 on only 75 trading days, signaling economic downturns. While not confirmed, BlackRock CEO Larry Fink suggested a recession may be imminent. Despite this, historical data suggests a potential 35% rally for the S&P 500 by 2026.
The S&P 500 could see a 35% increase by 2026 if history repeats. However, Trump’s tariffs may impact the economy negatively. Tariffs have already raised the average tax on U.S. imports to 28%, the highest since 1901, potentially leading to stagflation and costing households $4,900 yearly.
Investors may see a monster rally in the stock market, but tariffs could harm the U.S. economy. The average import tax is at a 100-year high, with tariffs possibly causing slower GDP growth and higher prices. Cautious optimism with high-conviction stocks is advised.
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