Both the S&P 500 (SPX) and the Nasdaq 100 (NDX) are down by over 1% on Tuesday as the Volatility Index (VIX) surges by 12%.
Meet Your ETF AI Analyst
That comes as fears of elevated valuations and an AI bubble plague investors. The S&P 500 currently trades at a forward price-to-earnings (P/E) ratio of 22.4x, higher than its 10-year average of 20.2x and its 30-year average of 17.1x. In addition, Bank of America’s latest global fund manager survey showed that 53% of investors believe AI stocks are already in a bubble, while 45% of investors named an AI bubble as the top stock market risk.
Soft Jobs Data Weighs on Stock Market
Labor market weakness is also contributing to the downside. This morning, the Bureau of Labor Statistics reported that continuing jobless claims totaled 1.957 million for the week ended October 18, the highest since August. Initial jobless claims rose to 232,000, up from 219,000 for the week ended September 18. Data between the two dates is unavailable due to the government shutdown.
It’s worth noting that the S&P 500 is up by 32% since it bottomed in April. For context, the index has an average annual return of 10.54% since 1957. In other words, the S&P 500 delivered over three years of its average return in the span of a few months. A pullback at current levels can be seen as healthy for the market as it prepares for the next leg higher.
Stay ahead of macro events with our up-to-the-minute Economic Calendar — filter by impact, country, and more.
Disclaimer & DisclosureReport an Issue
