The Cboe Volatility Index (VIX), known as Wall Street’s “fear gauge,” has risen to its highest level in nearly a year as U.S. President Donald Trump’s tariffs upset stock markets worldwide.
The VIX, which is based on trading in options on the S&P 500 index, climbed 8.5 points to 30.02 as the benchmark stock index fell 5% on April 3. That was the highest level for the fear gauge since August of last year.
Traders said options trading remains orderly and is meeting expectations given the drop in equities. The spike in the VIX on April 3 pales in comparison to the spike on Aug. 5 last year that was due to unwinds in the Japanese yen carry trade, which was the biggest gain in the VIX over the past 12 months.
Volatility Grows
“Implied volatility is higher, but it is the right amount higher that you would expect given the spot move,” said Benn Eifert, managing partner at hedge fund QVR Advisors. There has yet to be an “outsized move” that would suggest “exorbitant panic,” he added in a media interview.
The rise in the VIX has coincided with the steepest one-day selloff in U.S. stocks since the Covid-19 pandemic struck in March 2020. In addition to the 5% drop in the S&P 500 index, the technology-laden Nasdaq Composite index fell 1,050 points, or 6%, and the blue-chip Dow Jones Industrial Average fell 1,679 points or 4% on the day.
Is the Vanguard S&P 500 ETF a Buy?
The Vanguard S&P 500 ETF (VOO), which tracks the movements of the benchmark U.S. stock index, has a consensus Moderate Buy rating among 506 Wall Street analysts. That rating is based on 410 Buy, 88 Hold, and eight Sell recommendations made in the last three months. The average VOO price target of $632.00 implies 27.89% upside from current levels.
