Investors are bracing for heightened volatility in the stock market following the latest nonfarm payrolls report, which has stirred concerns about rising bond yields and persistent inflation. According to Stuart Kaiser, Citigroup's head of US equity trading strategy, the options market is pricing in a potential 1.2% move in the S&P 500 in either direction after the employment data release, marking the largest implied move on a jobs day since September. This expectation of increased volatility underscores the uncertainty surrounding future economic conditions and the Federal Reserve's monetary policy decisions.
The VIX, often referred to as the market's "fear gauge," reflects these heightened volatility expectations. As of 10:25 on January 8, the VIX is trading at 18.84, up from its last close of 17.82, with an intraday high of 19.50. This rise in the VIX indicates that traders are increasingly hedging against potential market swings as they navigate the complex landscape of strong job growth, high inflation, and the looming possibility of delayed interest rate cuts.