Bank of America Flags Record Spread Between Stock and Market Volatility as U.S. Shock Risk Rises

According to Bank of America, the divergence between individual stock volatility (VIXEQ) and overall market volatility (VIX) has widened to levels approaching the pre-burst dot-com bubble era, signaling elevated risk of market shock. As of July 14, VIXEQ stood at approximately 50, up 46% year-to-date, while VIX remained at 16, up only 13% for the period. The Chicago Board Options Exchange reported in June that the VIXEQ-VIX spread reached record highs.

BofA attributed the divergence primarily to semiconductor sector weakness. The iShares Semiconductor ETF (SOXX) has gained 83% year-to-date but fallen 12% from its June peak, while correlations between semiconductor stocks and broader market indices hit historic lows, limiting overall market volatility even as individual equities remained turbulent.