Investors' favorite measure of volatility has been quiet over the past month.
The CBOE Volatility Index, known by its ticker as simply the VIX (^VIX), has fallen for most of 2023 outside of a spike during the banking crisis in March, indicating expectations for volatility in the S&P 500 have been muted this year.
Some on Wall Street believe that's about to change.
"We haven't seen volatility this low since pre-pandemic period," Charles Schwab chief global investment strategist Jeffrey Kleintop told Yahoo Finance Live. "So the market's certainly pricing in clear sailing from here, and it may not be that smooth of a ride."
As the above graphic indicates, seasonality is at play for the VIX, which often rises into the October earnings season. But market strategists argue it could be more than that as headwinds mount.
The Federal Reserve is set to keep interest rates steady at its meeting this week, but investors fear the central bank is leaning toward a hawkish bias that will see interest rates remain higher than initially expected for a longer period of time.
Read more: What a Fed rate-hike pause would mean for bank accounts, CDs, loans, and credit cards
JPMorgan believes the prospect alone could be enough to shake markets.
"Equity valuation faces increasing risk from higher for longer," JPMorgan head of investment strategy Marko Kolanovic wrote in a note on Monday. "Equities are up 16% YTD mostly on multiple expansion while real rates and cost of capital are moving deeper into restrictive territory. History suggests this relationship is becoming increasingly unsustainable, posing risk to the equity multiple."
The high interest rates could further squeeze consumers who are already facing the reemergence of student loans. The ongoing strike from the United Auto Workers and a potential government shutdown could also have broader downside implications for spending and therefore business growth.
Not to mention oil prices are at their highest levels since November 2022, with some strategists predicting that oil will rise above $100 per barrel.
"As Summer 2023 transitions to Fall, Confusion Reigns Supreme," Evercore ISI senior managing director Julian Emanuel wrote in a note on Sept. 10. "Markets don’t know whether good news is bad and bad news is good for stocks, or for that matter, what exactly defines Good or Bad News."
Emanuel said high oil prices have garnered mixed results in the past. In 2010-2014, they were accompanied by rising consumer confidence and stocks.
Still, Emanuel pointed out that rising oil often doesn't mean higher stocks. He highlighted other events that sent oil higher — such as the developing conflict between Ukraine and Russia during 2022 or the Great Financial Crisis — but still contributed to bear markets.
"Discounting of a Recession in the form of a period of higher volatility and a deeper market pullback is not likely at least until 2024," Emanuel wrote. "Yet the Consumer’s psyche, already challenged by high gasoline prices, a low savings rate and the need to start repaying student loan debt, could give way."
A government shutdown could also be added to Emanuel's list of looming market headwinds. The shutdown is expected to commence on Oct. 1 and could be one of the most expensive yet. Truist co-chief investment officer Keith Lerner noted these events often "inject volatility."
Even if a shutdown often doesn't have a "major market impact," it'll likely be one of several things working against equities in the weeks ahead.
"We continue to anticipate that equities will remain in choppy waters near term as we remain in a seasonally weak period, stocks continue to consolidate large year-to-date gains, and we are lacking an obvious near-term catalyst," Lerner wrote in a note to clients on Tuesday.
Josh Schafer is a reporter for Yahoo Finance.
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