The S&P 500 has achieved a significant milestone, as it enters its longest stretch without a 2.05% sell-off since the great financial crisis. According to data compiled by CNBC from FactSet, the benchmark index has gone 377 days without experiencing such a decline. This market lull coincides with a surge in investor interest in mega-cap tech stocks like Nvidia, driven by the expectation that artificial intelligence will drive profits.

Wall Street's remarkable climb to record highs has been characterized by a surprising lack of volatility. In addition to the extended period without a significant sell-off, the S&P 500 has also not recorded a gain of at least 2.15% during this time. Year to date, the index has soared over 14%, propelled by expectations of Federal Reserve rate cuts and inflation moving closer to the central bank's 2% goal.

The dwindling level of market volatility can be seen through the CBOE Volatility Index (VIX), often regarded as the fear gauge for investors. Last month, the VIX plummeted to its lowest level since November 2020 and currently sits at historically low levels around 13. Joseph Cusick, a senior vice president and portfolio specialist at Calamos Investments, attributes this to institutional hedging activities and the presence of insurance products that have reduced the urgency to sell underlying assets.

Adam Turnquist, chief technical strategist at LPL Financial, highlights the diminishing macro uncertainty and changing monetary policy narrative as key factors behind the low volatility regime. The shift from rate hikes to rate cuts, along with resilience in the economy, has shifted the backdrop for stocks to one of low volatility.

Although the market currently enjoys a low-volatility period, it remains uncertain how long this trend will last. In 2017, the S&P 500 experienced just eight daily moves of over 1%, while the VIX hit historic lows below 9. However, the following year saw a resurgence in volatility, with the VIX surging above 50 before subsiding.

Investors will be closely monitoring the market's performance, especially as Goldman Sachs recently raised its year-end forecast for the S&P 500, citing strong earnings growth. Additionally, Warren Buffett's perspective on the GameStop frenzy and alternative investment options have also garnered attention.

Overall, the current stretch of low volatility in the S&P 500 reflects a sense of market calmness amid investor enthusiasm for mega-cap tech stocks and positive economic indicators. However, as history has shown, the winds of volatility can quickly change direction, adding an element of uncertainty to the future of the market.