The Chicago Option Exchange (CBOE) Volatility Index, also known as the “fear index” of the US market, has surged 23% in five trading days. This increase is attributed to growing anxiety over stock market volatility, which has touched the 20th mark during the day. The VIX measures market expectations for volatility over the next 30 days and reflects investor fear and stress before making investment decisions.
A level above 20 indicates high market risk, while a level above 30 signifies “extreme volatility.” The S&P 500 has declined by 3% in the past five trading days, while the Nasdaq has fallen nearly 5%. These losses are reminiscent of previous periods of high market uncertainty, such as Black Monday in August last year and during the COVID-19 pandemic in 2020.
As investors seek to navigate this uncertain environment, they are turning to exchange-traded funds (ETFs) that track the VIX index. The near-month ETF VIXY has risen nearly 7% over the past five trading days, while its leveraged counterpart UVXY has surged 10.16%. Wall Street analysts expect short-term market volatility to increase further due to the Trump administration’s tariff policy and job cuts.
Some experts predict a weakening of the stock market, with Barry Bannister, chief equity strategist at Stifel, forecasting the S&P 500 will decline to 5500 by the end of this year. He notes that historically high valuations, slowing growth, and high interest rates may trigger a 10% sell-off in the second half of the year.
Source: https://www.mk.co.kr/en/stock/11252047