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 crash 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.
The fear index is now at its highest level since August 2024.
Traders and analysts say options trading remains orderly and is meeting expectations given the steep drop in equities.
The spike in the VIX on April 3 is less than the rise that occurred on Aug. 5 last year that was caused by an unwinding of the Japanese yen carry trade.
While the sharp jump in the VIX is concerning, analysts point out that there has yet to be an outsized move in the index that would suggest an exorbitant market panic.
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, the technology-laden Nasdaq Composite index fell 1,050 points and the blue-chip Dow Jones Industrial Average fell 1,679 points, or 4%, on April 3.
A sudden rise in the VIX is almost always a sign of increased market volatility.