Getty Images / Drew Angerer
- The Cboe Volatility Index, also known as the VIX and widely seen as the market’s fear gauge, spiked to 67 on Thursday.
- It’s the highest reading from the gauge since the 2008 financial crisis.
- The VIX jump came amid a wild morning in stocks, in which a major rout activated a so-called market circuit breaker and halted trading for 15 minutes.
- Watch the VIX live on Markets Insider.
Amid a morning of wild trading, Wall Street’s fear gauge has spiked to levels most recently seen in 2008.
The Cboe Volatility Index, also known as the VIX, spiked to 67 on Thursday, its most elevated level since the height of the financial crisis.
The index uses S&P 500 options to weigh traders’ expectations for volatility in the coming 30-day period. It’s thought of as the market’s favorite measure of broad volatility, and it generally spikes during selling or buying frenzies.
Thursday delivered such a rout, as US stocks tanked at the open of trading in New York, putting all three major indexes in bear-market territory. The fall was so sharp that it triggered a so-called circuit breaker on the New York Stock Exchange and Nasdaq, halting trading for 15 minutes.
When trading resumed midmorning, stocks fell further, showing that investors continued to sell amid panic that the COVID-19 pandemic would hinder global growth. Safe-haven assets such as long-term US Treasury bonds rallied, weighing on yields.
“The spike in volatility is partially warranted given the large moves that are happening in the market and the very wide set of potential outcomes that could happen in the future,” Nancy Davis, a portfolio manager of the Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL), told Business Insider in an email.
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“The impact of the virus on the economy and on oil prices is still unknown and too early to be calculated with some confidence,” Davis added. Going forward, “investors should remain rational, evaluating each situation on a case by case each situation, always trying to have a diversified portfolio and with asymmetric potential like IVOL,” she said.
Continued volatility could also be an opportunity for some investors. “Yes, there will be economic disruption and an all-but-certain recession,” Greg McBride, the chief financial analyst at Bankrate, told Business Insider in an email. As economic distress continues, he said, markets will “undoubtedly overshoot to the downside,” making it important for investors to maintain long-term perspectives.
“Markets will recover sooner, and much faster, than the overall economy and you cannot be sitting on the sidelines when that happens,” he said.
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