Volatility is above pre-pandemic levels

Sources: Bloomberg and Wells Fargo Investment Institute. Monthly data from January 1, 2008 to March 31, 2022. For illustrative purposes only. S&P 500 volatility measured by the CBOE Volatility Index® (VIX®). Euro STOXX 50 volatility measured by the VSTOXX Index. Hong Kong Hang Seng volatility measured by the HSI Volatility Index. Nikkei volatility measured by the VNKY Index. These indexes measure the markets expectations for implied or expected volatility based on option prices. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. Stock markets, especially foreign markets, are volatile. Stock values may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Fed = Federal Reserve.

Key Takeaways

  • Volatility spiked in the first quarter of 2022 as the Federal Reserve initiated its first policy tightening cycle since 2018. The Russia-Ukraine war added to investor uneasiness.
  • We expect periods of market uncertainty to persist in 2022, but volatility should present opportunities to invest in markets at lower price points.