AI is losing its stranglehold on the U.S. stock market. Here's why — SkimNews
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- The Cboe VIXEQ–VIX spread is reversing after blowing out to record highs this summer, with traders now selling broad index-wide equity exposure as VIX jumps to its highest since April relative to VIXEQ.
- The 10-year Treasury yield is approaching a three-year high of 5% as the U.S. Treasury sell-off accelerates, pulling investor focus to macroeconomics and policy over single-name AI stories.
- Crude oil futures are back above $100 for the first time since May, and the State Street Energy Select Sector SPDR ETF (XLE) overtook tech as the year's best-performing sector at up 43%.
- Scott Nations, president of Nations Indexes, said the reversal reflects resurgent inflation fueled by higher oil prices, the Fed's September 16 meeting, and political and geopolitical concerns dominating trader thinking.
- Micron's implied volatility fell from 112 to 58 despite its share price declining, and SpaceX's dropped from 122 to 56 even as the stock gained 30% since its August report — illustrating the cooling of bullish single-name options flows.
- Kevin Davitt, head of index options content at Nasdaq, said the cross-market/single-stock volatility relationship has "normalized," with the earlier summer divergence epicenter in semis that rippled into NDX options.
- The end of earnings season removed a natural catalyst for elevated single-name volatility; Nations Indexes' VolDex showed vol collapsed in 18 of 19 tracked stocks on Thursday, with Exxon Mobil the lone exception.
Why it matters: Options traders who built positions around AI-driven single-name volatility now face a regime change: with the 10-year yield near 5%, oil above $100, and the September 16 Fed meeting ahead, macro catalysts are dictating direction and individual-stock vol is collapsing regardless of price moves. Energy at 43% year-to-date via XLE shows where capital has actually rotated.
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