The Cboe Volatility Index (VIX), also known as Wall Street’s “fear gauge,” experienced a significant surge of 20% on Friday. According to FactSet data, this propelled the Vix to its highest level in over a week, creeping close to levels not observed since late May. Intraday, the index reached a high of 20.78, just shy of its October 4th peak of 20.88. These movements briefly pushed the index above its long-term average of 19.6.
Throughout most of 2022, the Vix had remained relatively subdued despite market downturns. It only saw a few fleeting spikes above its long-term average. However, on October 13th, the index reached a yearly high of 33.87 as stocks plunged following the release of an influential inflation report. Fortunately, the market rebounded significantly over the course of the day.
Market strategists point to several factors that contributed to the recent stock market turmoil. Geopolitical tensions surrounding Israel’s escalating conflict with Hamas and the U.S. plan to impose additional sanctions on Russian oil sales played significant roles. The resulting spike in crude-oil prices rattled markets further.
As a result, the S&P 500 also experienced a decline, hitting a low of 4,311.97 and losing 1.1% on Friday, according to FactSet data. While it has since recovered some of those losses, it remains on track to finish lower.
In conclusion, the recent surge in the Vix reflects heightened investor concerns and market instability. Various geopolitical tensions and events have contributed to this turbulence, impacting both stock prices and investor sentiment.