Schaeffer's Top Stock Picks for '25

Volatile Market Trends Ahead as CPI Data Looms

Since 2021, the VIX has tended to suffer a median change of -4.3%

Managing Editor
Feb 11, 2025 at 11:21 AM
facebook X logo linkedin


Subscribers to Chart of the Week received this commentary on Sunday, February 9.

Should the alarm bells begin sounding for traders looking for signs of the health of the economy, the coming week will bring larger indicators as to how President Trump’s tariffs are already be causing tension. A fresh bout of jobs data kicked off this past Friday’s trading, in which investors saw nonfarm payrolls bring in a lower-than-expected 143,000 jobs in January.

While the sticker shock of Trump’s tariff announcements had started to wear off, stocks looked resilient for the first few weeks. However, on Friday the University of Michigan’s consumer sentiment survey for February whiffed badly on estimates, with polled participants anticipating a one-year inflation rate of 4.3% -- what would be its highest level since November 2023.

Despite an open in the black, stocks quickly sold off, as the survey added to the gloom and doom slowly permeating Wall Street. Driving this sentiment home was the most recent American Association of Individual Investor (AAII) survey, which showed the largest bear reading since November 2023, ranking in the 90th percentile of its all-time range.

The upcoming week will be flooded with highly anticipated economic reports, most notably the Consumer Price Index (CPI) for January, which is scheduled to release at 8:30 AM E.T. on Wednesday, February 12. Core CPI is one of the Fed’s preferred inflation gauges, and last month’s reading of the annual rate was 3.2%, slightly better than the anticipated 3.3%. While levels have yet to see a drastic decrease, an acceleration has also been avoided of late.

 

CPIchartCotw

But how exactly has this increased uncertainty and worry surrounding the fate and repercussions of tariffs on near-term inflation affect the stock market? Directly following the Jan. 15 CPI report, the Dow Jones Industrial Average (DJI) clocked a 703-point win and the Nasdaq Composite (IXIC) soared 470 points higher. The S&P 500 Index (SPX) surged 100 points, while on the flip side we saw the 10-year Treasury yield plunge even further from its Jan. 13, 4.89% high down to a low of 4.63%. Rounding out the current week, the 10-year bond is sitting even lower, just shy of 4.5%.

Sticky inflation could send the Cboe Volatility Index (VIX) to the 20 mark, though as of Friday, the market’s "fear gauge" is sitting at 16.45, locking in its first win in five sessions. The mid-January post-CPI stock market surge unsurprisingly pummeled the VIX, the shedding more than 13.8% for the session. Should we expect a repeat this week?

To no great surprise, data from Schaeffer’s Quantitative Analyst Rocky White points to a historically negative response both on the day and following week for the VIX, after a CPI release. The tables below show both the VIX and S&P 500 returns over the next week after CPI release dates, then after other dates for comparison, looking at data since 2021.

As far as the VIX goes, it typically falls over the next week after the release. Since 2021, the median change in the VIX was -3.5% and it finished positive only 40% of the time. The SPX has slightly outperformed in the week after the CPI release, posting a median return of 0.4%, positive 60% of the time.

 

VIXtables1cotw

 

vixtables2cotw

 

As for the day of a CPI release, the aforementioned data seems to only be exacerbated for the fear gauge. Since 2021, the VIX has tended to suffer a median change of -4.3%, positive only 27% of the time. On the other hand, the S&P 500 looks slightly less enthusiastic than its next week return, posting a median return of 0.3%, positive 58% of the time.

Investors should get used to murky market sentiment remains, at best. However, seasonality is on Wall Street’s side, and during a potentially low-volume environment, any enigmatic political and economic headlines can often be navigated smoothly.

 
 
 

Which of These SUB-$5 Stocks Could 26x From Here? (AD)

He called a rare 11x on Tesla…

Then he called a 26x on Workhorse…

Then an even rarer 35x on Nio Inc…

Now Tim Bohen says these 5 tiny “America First” stocks are next up in 2025.

They’re trading for less than $5 right now.

But thanks to Elon & Trump’s new alliance…

They could be off to the races in Trump’s first 100 days.

And right now for a limited time…

You can get the names & tickers for just $1 here. (AD)

10 Stock Picks FREE
 
 

Featured Articles from Trusted Partners:

🚀 One Stock Pick Could Change Everything in 2025
What if one stock pick could define your success next year? Get 10 expert-vetted stocks set for 2025—plus 5 bonus picks to watch now. Get the Report →

🆕 New Options Need New Trading Strategies
Zero-DTE options are the newest (and hottest) options to trade.  Professional traders have rushed into the market and are making a mint.  Don’t get left behind - learn all about these options, how to trade them, market setups to profit from, plus much more. Download now →

👀 Revealed: 3 Defensive Stocks for Your Portfolio
Worried about the market? This free report reveals 3 under-the-radar defensive stocks for uncertain times in any kind of economy.

 

 
 

FREE Report Download

 

Follow us on X, Follow us on Twitter