S&P ETFs sink to bear market territory and volatility funds rise

May 20, 2022 3:12 PM ETSPDR S&P 500 Trust ETF (SPY), IVV, VOO, UVXYVIX, VXX, VIXY, UVIXBy: Jason Capul, SA News Editor14 Comments

Bear market is ahead

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As the S&P 500 dips into bear market territory, volatility levels in the S&P VIX Index (VIX) have risen 5.7%. In this environment, major index market-tracking ETFs have dipped while related volatility ETFs and ETNs have gained ground.

As the U.S. stock market heads towards the weekly close, exchange traded funds that mirror the S&P 500 all find themselves in the red. Funds like the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), iShares Core S&P 500 ETF (NYSEARCA:IVV), and Vanguard 500 Index Fund (NYSEARCA:VOO) all trade lower by 1.8%.

These funds are also down about 20% from their Jan. 4 highs.

As fear rises, so do levels in the VIX. The VIX now sits above the 31 handle and came just shy of the 33 marker earlier in the session.

Volatility ETFs and ETNs have climbed higher in afternoon trading as Wall Street’s selloff has picked up steam. In particular, the iPath Series B S&P 500 VIX Short Term Futures ETN (VXX), ProShares VIX Short-Term Futures ETF (VIXY), ProShares Ultra VIX Short-Term Futures ETF (BATS:UVXY) and the 2x Long VIX Futures ETF (UVIX) all pushed higher.

Volatility price action: VXX +2.8%, VIXY +5.1%, UVXY +7.7%, and UVIX +9.7%.

As markets stand, the S&P is down for the week and is on pace to close lower for the seventh straight week. The S&P 500 has also now crossed into bear territory with the day's losses.

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