US Stock Market Overview – S&p 500 Hits Record but VIX Rises

US stocks were mixed on Friday, as the tech-heavy Nasdaq took a breather. The S&P 500 index notched up another fresh all-time high. The sectors in the S&P 500 index were mixed, driven by gains in defensive sectors such as Real-estate and Utilities. Energy shares were the worst-performing sector, despite bullish news on crude oil. There were no important US economic data releases on Friday. The Chicago PMI is scheduled to be released on Monday. The VIX volatility index rebounded on Friday, climbing more than 6%.

Crude Oil Remains Buoyed but Fails to Lift Energy Shares

Energy shares slid on Friday despite a larger than expected draw in crude oil inventories reported by the Department of Energy 2-days late due to the Christmas Holiday. According to the Energy Information Administration, crude oil inventories decreased by 5.5 million barrels from the previous week. This compares to expectations that stockpiles would decline by 250K barrels. Gasoline inventories increased by 2.0 million barrels last week while distillate fuel inventories decreased by 0.2 million barrels last week Total commercial petroleum inventories decreased last week by 10.2 million barrels last week. Demand unfortunately disappointed. Total demand was down by 3.0% from the same period last year, according to the EIA.

The VIX Rallies

The VIX volatility index perked up and rallied more than 6% on Friday, climbing above 13% for the first time in 2-weeks. After hitting 1-month lows this week, the VIX rebounded into the last week of the year. The VIX represents the “at the money” implied volatility on the S&P 500 index. As stock prices hit fresh highs, traders have been selling implied volatility allowing complacency to settle in. The rise in the VIX despite an S&P 500 index hitting fresh all-time highs, shows that traders are beginning to purchase protection ahead of the new year.