U.S. stocks closed slightly lower again today, making this week three for three on the down side. The Standard & Poor’s 500 stock index was off by 0.2% at the close and the Dow tripped lower by 0.33%. The Russell 2000 small company index was down 0.64%. But the NASDAQ Composite ticked higher by 0.06% and the iShares NASDAQ Biotech ETF (IBB), a recent indictor of a risk-off trend, was up 0.89%.
The consensus on Wall Street is, as it was yesterday, that this is a consolidation after a big run upwards in the market and that it is therefore a good thing. A slight dip in prices would form a base, the thinking goes, for a new leg higher.
Certainly there’s not much in way of worry in the CBOE S&P 500 Volatility Index (VIX), which measures demand for hedges to protect against a drop in the S&P stock index. The VIX did move up today, rising 3.32% to 11.88. And that is the third straight move upward in the volatility index. But the total recent move from the local low at 10.96 on March 3 is just 8.4%, which is a very small move for the volatile volatility index. And it’s an especially modest move given the European Central Bank meeting on Thursday and the Federal Reserve meeting on Wednesday of next week. The Fed is expected to raise interest rates at its meeting by 25 basis points.