The Chicago Board Options Exchange Volatility Index, the gauge known as VIX that measures options traders’ estimate of future price swings in the S&P 500, rose 0.7% to 13.74. The gauge has lost 17% this month.
The S&P 500 is trading at 15.9 times its companies’ estimated earnings, the highest valuation since the start of 2010, according to data compiled by Bloomberg.
Two of America’s best known investors are moving in opposite directions in the stock market, with Laszlo Birinyi predicting more gains as David Einhorn takes a more cautious approach.
“As the market continued its relentless climb, we’ve become more conservatively positioned,” hedge-fund manager Einhorn said today on a conference call.
Long positions, which gain on rising asset prices, exceeded short bets by 35 percentage points as of Sept. 30 at Greenlight Capital Re Ltd., the Cayman Islands-based reinsurer where Einhorn oversees investments and serves as chairman. That’s down from about 42 percentage points three months earlier, said Einhorn, who gained fame for betting on a decline in Lehman Brothers Holdings Inc. stock before it collapsed in 2008.
Birinyi, president of Birinyi Associates Inc., raised his forecast for the S&P 500, predicting a 3.2% advance to 1,820 in the next three months.
Birinyi, one of the first money managers to advise clients to buy in 2009, said he purchased calls on an exchange-traded fund tracking the S&P 500, according to a report today. His previous forecast for the U.S. equity benchmark, set Sept. 25, was 1,760.
Exxon, MasterCard and American International Group Inc. are among 34 companies in the S&P 500 reporting results today. Of the 356 companies that have reported results this season, 76% exceeded analysts’ predictions for profit, while 53% beat sales estimates, data compiled by Bloomberg showed.
Profits for members of the gauge probably increased 3.7% in the third quarter as sales climbed 2.4%, according to analysts’ estimates compiled by Bloomberg. Analysts project earnings will rise 7.5% in the final quarter, and 8.3% in the first three months of 2014.
“Once they do start tapering, the market will start trading more on fundamentals, and fundamentals look fairly resilient,” Andres Garcia-Amaya, New York-based global market strategist at JPMorgan Chase & Co.’s mutual funds unit, said in a phone interview today. His firm oversees $400 billion.
Exxon rose 1.7% to $90.34 for the biggest gain in the Dow. The largest oil company by market value lifted production for the first time in more than two years and reported third-quarter profit that beat analyst estimates.