Morning MoneyBeat: Volatile Markets? Think Again

Morning MoneyBeat: Volatile Markets? Think Again 

• By Steven Russolillo

Morning MoneyBeat is the Journal’s pre-market primer packed with market updates, insights and must-read news links. Send us tips, suggestions and complaints: steven.russolillo@wsj.com

MARKET SNAP: At 6:15 a.m. ET, S&P 500 futures up 0.3%. 10-Year Treasury yield higher at 2.72%. Nymex up 34 cents at $101.18. Gold 0.6% lower at $1290.70. In Europe, FTSE 100 up 0.6%, DAX up 1% and CAC 40 up 0.4%. In Asia, Nikkei 225 closed and Hang Seng up 1.5%.

WATCH FOR: February S&P/Case-Shiller 20-City Home-Price Index (9:00 a.m. Eastern Time): seen +13.1%; previously +13.2%. April Consumer Confidence (10:00): seen 83.0; previously 82.3. Aflac, AMC Entertainment, Bristol-Myers Squibb, Coach, DreamWorks, eBay, Marriott, MGM Resorts, Panera Bread, Sprint and Twitter are among companies scheduled to report quarterly results.

THE BREAKFAST BRIEFING

The Dow Jones Industrial Average rose by as many as 139 points on Monday, lost those gains and then fell by 49 points at session lows before finishing the day up 87 points.

Sounds pretty volatile, right?

Think again.

Such triple-digit-point swings don’t matter much these days with the Dow trading well above 16000. A 100-point day makes for a good headline, but it is roughly the equivalent of a 0.6% move. By comparison when the Dow traded at about half its current value five years ago, a 100-point swing had double the impact on a percentage basis.

We noted yesterday that the Dow and S&P 500 have stalled around current levels for the past two months. Not only is the market going nowhere fast, but its daily swings also hover around historically low levels. To some, this one measure looks similar to the 1990s, when there wasn’t a single bear market–a 20% slide in stocks from a peak—throughout the entire decade.

That could bode well for the current bull market that some worry is running out of steam.

Daily volatility, measured by the S&P 500’s intraday percentage high subtracted by its low, sits at about 0.95%, the second-lowest level on a yearly basis since 2006, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. The current reading is below the 1.07% average high-low spread in 2012, or the 1.64% average move in 2011 during the throes of the European debt crisis.

Average one-day swings were about three times greater in 2008 during the financial crisis than they are today.

“I keep hearing that volatility has returned to the market,” Mr. Silverblatt says. “Maybe, if you just started trading.” That’s because 2013 was the least volatile year since 1995, S&P’s data show. But in 2014, the average daily price swing of 0.95% remains well below the 50-year average of 1.47%.

Stocks rallied Monday as the broad market recovered from a selloff in many of the formerly highflying momentum stocks. The S&P 500 is up 1.1% for the year and is only 1.1% away from its record high hit earlier this month.

The grind higher following last year’s surge is showing similar characteristics to the 1990s. From 1993 through 1997, the average daily swing for the S&P 500 was 0.94%, or roughly the equivalent of this year’s figure. In that five-year stretch, the S&P 500 more than doubled in price.

The big difference right now is in the wide dispersion in returns. Slightly more than 100 stocks in the S&P 500 this year are currently up at least 10% this year, while more than 50 are down at least 10%.

“While the index has been [roughly] flat, it would appear the battle from within has been ranging, and that has added to the perception of volatility,” Mr. Silverblatt says. But in reality, “today’s market is tame.”

Morning MoneyBeat Daily Factoid: Comedian Jerry Seinfeld turns 60 years old today. Happy birthday, Jerry.

-By Steven Russolillo; follow him on Twitter @srussolillo