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By Gunjan Banerji

It's eerily calm out there in the stock market.

The Cboe Volatility Index, or VIX, dropped below 12 last week, a nearly five-year low. The gauge, based on options prices tied to the S&P 500, measures expected volatility in stocks and has closed below 20, its long-term average, for 160 days now, the longest stretch since 2018, according to Dow Jones Market Data.

To some investors, the prolonged calm is a sign that tumult may be just around the corner. The idea is that it's been so long without a bout of volatility, that the market may be due for a pullback.

That may be the case. But it's important to remember that market moves can stay muted for very long stretches. For example, from 2016 to 2018, there was a stretch of more than 310 days in which the VIX was stuck below 20. Timing the return of volatility is tough.

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(END) Dow Jones Newswires

June 20, 2024 10:45 ET (14:45 GMT)

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