Stocks are mixed in early trading along with gold and silver. Crude oil and the dollar are a bit higher, while Treasuries are selling off.
Something is lurking beneath the surface of the stock market – significantly higher volatility in the technology sector! Bloomberg reports that the CBOE NDX Volatility Index is trading at its highest level relative to the CBOE VIX Index since 2002. In other words, vol in the tech space is the highest relative to the S&P 500 Index (^SPX) since the tail end of the Dot-Com Bust – despite no bust being evident (yet).
Source: Bloomberg
One driver is high realized volatility for tech versus the rest of the market, with the Nasdaq-100 Index trading up or down 1% per day more frequently. Anxiety about how the AI boom will shake out – and investors’ desire for protection in the options market – is another factor. As a side note, today is the day SpaceX (SPCX) will be added to the Nasdaq-100. Passive funds will need to add the stock as a result.
Meanwhile, South Korea’s SK Hynix is selling 17.8 million American Depository Receipts (ADRs) on the Nasdaq this week. The firm is targeting Friday as the date the US-traded shares would be available. The sale would raise about $28.2 billion at current exchange rates. SK’s Korean shares have more than tripled so far this year, though they lost 12% in the past few days amid concern the stock ran too far too fast.
Tech companies aren’t just selling equity, by the way. They’re also raising gobs of money in the debt markets. Amazon.com Inc. (AMZN) plans to sell at least $25 billion in intermediate-to-long-term bonds this week. That includes one tranche of securities that don’t mature until 2066. Other hyperscalers have been selling tends of billions of dollars in debt to fund AI infrastructure projects, too.
