Current S&P 500 development: Investors are increasingly relying on hedging against falling prices

Current S&P 500 development: Investors are increasingly relying on hedging against falling prices

According to a report from finanzmarktwelt.de, after the recent recovery in the S&P 500, fears of a further collapse in the stock market are gradually returning. Hedging costs are rising, which is an indication of investors' increased nervousness. The ongoing interest and inflation concerns continue to weigh on the stock markets. Prices for protection against a further downturn have risen, suggesting increased caution among investors.

The stock market correction came amid worsening economic problems in Europe and China. Expectations for an annual increase in consumer prices in August are 3.6%. With inflation continuing, traders are betting that the Fed will keep borrowing costs steady in September.

The costs for hedging are as low as they were shortly before the Corona crash in March 2020. Traders are taking advantage of the current calm to protect themselves cheaply. Stock market volatility continues to be an issue despite the strong rise in the S&P 500. The risk of an extension of the correction remains.

The S&P 500's surprisingly strong rise this year has caused many Wall Street analysts to revise their forecasts. Inflation has moderated while the economy has remained relatively resilient. Many analysts had to revise their year-end forecasts for the index upwards.

The increased hedging costs and ongoing volatility may lead to further turbulence in the stock markets. The development of interest rates and inflation will continue to play an important role. Analysts expect the stock markets to remain uncertain in the coming weeks.

It remains to be seen how the situation will develop and whether the Fed will keep its borrowing costs constant in September. Uncertainties arising from worsening economic problems in various parts of the world will continue to shape markets.