US Stock Market Overview – Stock Fall and the VIX Spikes Ahead of 2020

Rising commodity prices could create issues for the Fed
David Becker
Wall street, New York, USA.

US stocks moved lower on Monday as trader’s continued to rebalance their position ahead of the new year. The S&P 500 index notched up a robust 2.5% month to date ahead of the last trading day of the year. The selloff appears to be some profit taking, which might continue into the first half of 2020. The VIX volatility index surged 10.5% on Monday, hitting the 200-day moving average at 15 for the first time in 2-weeks. US pending home sales climbed 1.2% from the previous month, missing the median forecast. Most sector in the S&P 500 index were lower, led down by communication and healthcare. Utilities bucked the trend. For the month of December, most sectors were higher, led by a surge in Energy shares that could close up 9.75% for the month, while real-estate bucked the trend and is down approximately 0.25% month to date.

Volatility is Rising

The VIX volatility index spent the second half of December in the red, as stocks rose to all-time highs and complacency settled-in. Over the past two trading session, the VIX has soured, rising nearly 11% on Monday, and testing key resistance levels near the 200-day moving average near 15. A break above this level on the VIX would likely coincide with a selloff into the new year.

Commodities Could Create Issues for the Fed

Commodity prices have been on the rise, buoying both energy and mining stocks. Crude oil prices have been lifted by a combination of supply shortages and a falling dollar. US yields have been easing relative to European yields which has weighed on the greenback. If the dollar continues to fall and intermediate goods inflation rises just as wages are rising the Fed could be put into a position to raise rates. Higher rates during an election year becomes difficult for a central bank. The Fed has already faced heavy pressure from President Donald Trump and there is the chance that the Fed and the market become dislocated as the market begins to price in Fed hikes, while the Fed is sitting on the sidelines waiting for the outcome of the 2020 election.

US Pending Home Sales Rose

US pending home sales climbed 1.2% from the previous month, missing expectations.  This reflects the market’s turnaround from last year’s weakness, contract signings jumped 5.6% from November 2018.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.