Please ensure Javascript is enabled for purposes of website accessibility

What’s Driving Volatility?



Volatility is back after a period of calm as a resilient economy keeps both inflation sticky and the Fed on hold.


Until a few weeks ago, the S&P 500 was on a steady climb and market volatility was near multi-year lows. But consumer resilience and better-than-expected economic growth has kept inflation sticky, causing investors to pare back their expectations for rate cuts in 2024. The market is now pricing in just one and a half cuts, down from six at the start of the year.


The shift in market sentiment has led to increased volatility in both bond and equity markets. The yield on the 10-year Treasury note has jumped more than 40 basis points in April, while the S&P 500 declined as much as 5% from its late-March high. Although equities have made up some ground this week, we would not be surprised to see volatility persist.


However, because of the S&P 500’s strong first quarter, which it ended with a gain of more than 10%, a pullback is actually healthy for the market. This week’s inflation data, the U.S. first-quarter GDP report and Big Tech earnings results could be the catalysts that determine the direction of the market over the next few weeks.


We remain constructive on stocks over the long run due to our improved earnings and growth outlooks. Therefore, we believe that moving to the sidelines in an attempt to time the market could  lead to significant underperformanceover the long term. 

This material is provided for illustrative/educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice. Effort has been made to ensure that the material presented herein is accurate at the time of publication. However, this material is not intended to be a full and exhaustive explanation of the law in any area or of all of the tax, investment or financial options available. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation. The Bank of New York Mellon, DIFC Branch (the “Authorised Firm”) is communicating these materials on behalf of The Bank of New York Mellon. The Bank of New York Mellon is a wholly owned subsidiary of The Bank of New York Mellon Corporation. This material is intended for Professional Clients only and no other person should act upon it. The Authorised Firm is regulated by the Dubai Financial Services Authority and is located at Dubai International Financial Centre, The Exchange Building 5 North, Level 6, Room 601, P.O. Box 506723, Dubai, UAE. The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorised by the Prudential Regulation Authority. The Bank of New York Mellon London Branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. The Bank of New York Mellon is incorporated with limited liability in the State of New York, USA. Head Office: 240 Greenwich Street, New York, NY, 10286, USA.  In the U.K. a number of the services associated with BNY Mellon Wealth Management’s Family Office Services– International are provided through The Bank of New York Mellon, London Branch, One Canada Square, London, E14 5AL. The London Branch is registered in England and Wales with FC No. 005522 and BR000818.  Investment management services are offered through BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, One Canada Square, London E14 5AL, which is registered in England No. 1118580 and is authorised and regulated by the Financial Conduct Authority. Offshore trust and administration services are through BNY Mellon Trust Company (Cayman) Ltd.  This document is issued in the U.K. by The Bank of New York Mellon. In the United States the information provided within this document is for use by professional investors.  This material is a financial promotion in the UK and EMEA. This material, and the statements contained herein, are not an offer or solicitation to buy or sell any products (including financial products) or services or to participate in any particular strategy mentioned and should not be construed as such. BNY Mellon Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland BNY Mellon Investment Servicing (International) Limited is regulated by the Central Bank of Ireland. Trademarks and logos belong to their respective owners. BNY Mellon Wealth Management conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation. ©2024 The Bank of New York Mellon Corporation. All rights reserved. WI-528751-2024-04-15