VIX Sees Record Spike As Market Turmoil Resurfaces
10 months ago • 1 min
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What’s going on here?
The CBOE Volatility Index (VIX) saw its biggest intraday jump in history on Monday, August 5, 2024, spiking 42 points as investor fears over a recession grew.
What does this mean?
Dubbed Wall Street's 'fear gauge,' the VIX surged to a high of 65.73, up from its previous close of 23.73 on Friday. It stabilized somewhat at 57.15, the highest level since the market chaos of March 2020. Investor jitters also spread to US stock futures, with Dow e-minis dropping 1,257 points (3.15%), S&P 500 e-minis falling 247.5 points (4.6%), and Nasdaq 100 e-minis plunging 1,155.25 points (6.23%). The market’s shaky ground echoes concerns about an impending recession, driven by heightened economic uncertainty.
Why should I care?
For markets: Volatility shakes investor confidence.
The VIX's historic jump signifies a massive shift in market sentiment, signaling that the extended calm period—356 sessions without a 2% dip in the S&P 500—may be over. Amidst these fears, the Japanese market also took a hit, with losses surpassing the 'Black Monday' crash of 1987 at one point. The portfolio manager of Rational Equity Armor Fund highlighted an unusual liquidity crisis, noting the market's dependency on the assumption of perpetual gains. This disruption could foreseeably lead to more turbulent trading sessions ahead.
The bigger picture: Recession fears grip global markets.
The dramatic rise in the VIX reflects broader anxieties about global economic stability. Persistent inflation, geopolitical tensions, and fluctuating economic policies have left investors on edge, reigniting fears of a deep recession. As portfolios face this new reality, expect shifts towards more conservative investments and heightened market scrutiny over any economic data releases. This volatility underscores the fragility of post-pandemic recovery and the unpredictable nature of market cycles.
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