Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Investment and Options Strategist
Summary: The markets faced a significant selloff due to disappointing earnings from Tesla and Alphabet, causing major indices to drop and volatility to spike. Heightened uncertainty is reflected in the increased volatility measures, indicating a cautious market outlook ahead.
Today, the markets experienced a significant selloff driven by disappointing earnings reports from major tech companies Tesla and Alphabet (Google). Both companies fell short of investor expectations, leading to a broad market decline:
The news caused a ripple effect across major indices, with technology stocks being particularly hard hit.
As of the market close, the data reflects substantial declines across key indices and a spike in volatility measures:
Volatility indicators show heightened investor anxiety:
Futures markets also reflect this negative sentiment:
Looking ahead, several factors could influence market direction:
Earnings season continuation:
Economic indicators:
Federal Reserve actions:
Sector rotation:
Political events (US elections):
Only time will tell if the market is headed for a deeper correction or if this presents a good entry point for investors. Volatility, measured by the VIX and related indices (VVIX, VIX1D, VIX9D, etc.), clearly shows that uncertainty has risen. This increase in volatility signals that extra caution is warranted. Investors should stay vigilant, keeping a close eye on upcoming earnings reports and economic data to navigate these turbulent times.