Global market turmoil has pushed a key measure of expected stock market volatility to levels not seen since the peak of the pandemic and before that, the 2008 financial crisis.
The CBOE Volatility Index (VIX) surged to 54 on Monday, its highest level since 2020. It closed at 23.4 on Friday, the first time it has closed above its long-term average of 20 in six months.
Some positive news from the services sector late Monday morning helped ease fears and helped the VIX index pare gains to 33.96, its highest level since October 2020.
The VIX is based on option prices tied to the S&P 500. It is considered a measure of expected volatility. It has been nicknamed the “fear index” or “fear gauge” because it tends to spike during market selling pressure.
As much of the economy went into lockdown in March 2020, the VIX rose to around 80, a level similar to that seen when Lehman Brothers collapsed and other Wall Street firms were on the brink in fall 2008.
