The Vanguard S&P 500 ETF (VOO) surged to a record high this week as the fear and greed index remained in the green zone ahead of the much-anticipated NVIDIA earnings. VOO, the biggest S&P 500 ETF, was trading at $595, up by 35% from its lowest level this year.
Fear and Greed Index is rising
The VOO ETF continues to rise as investors remain greedy and hopes of Federal Reserve interest rate cuts rise following last week’s statement from Jerome Powell at the Jackson Hole Symposium in Wyoming.
In that speech he warned that the labor market was deteriorating and that the bank would be willing to adjust its monetary policy. That view mirrored what two Fed officials like Christopher Waller and Michele Bowman have always said.
In their recent statements, the two said that they supported cutting interest rates, because in their view, the labor market was in a more delicate place than inflation
Therefore, market participants are betting that the bank will start cutting interest rates in the next meeting, with officials noting that interest rates will still be highly restrictive
As a result, investors have embraced a sense of greed in the market. The Fear and Greed index moved to the greed zone of 63, with all but one sub-index being in the greed area.
These sub-indices include stock price breadth, stock price strength, put and call options, safe haven, and junk bond demand, which are in the greed area. Only the VIX Index has remained in the neutral point.
Strong quarterly earnings
The greed has also jumped because of the strength of corporate earnings in the second quarter.
FactSet data showed that the average earnings growth in Q2 was 11.8%, much higher than the 4.4% that analysts were expecting. It was also the third consecutive quarter that the S&P 500 Index recorded double-digit earnings growth.
Most companies, including the most important ones, recorded strong financial results. For example, NVIDIA said that its revenues jumped by 54% in the second quarter, hitting over $46 billion.
The company predicted that its future reports will be strong, but warned that the AI industry would start to moderate, in line with what most analysts were expecting.
The VOO ETF has also done well as the trade war has moderated. Trump has already reached deals with other countries, including those in the European Union and Asia.
The truce with China continues to hold, while talks with some countries are continuing. While the US has imposed a 50% tariff on India, there is a likelihood that it will lower them in the coming weeks.
These tariffs are not good for companies in the VOO ETF. However, the fact that the trade war has not escalated is seen as a good thing.
VOO ETF stock price analysis
The daily timeframe chart shows that the VOO ETF stock price has been in a strong bullish trend after bottoming at $442 in April this year. It has jumped to a record high of $596 and will soon get to the psychological level at $600.
The VOO stock price is above the important support level at $560, the previous all-time high. It has also formed an ascending channel and has just moved slightly above the lower side.
The ETF has remained above all moving averages, while the Relative Strength Index is rising.
Therefore, the most likely scenario is where the VOO ETF continues rising, with the next key target to watch being at $650
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