Equity markets are having a bumpy ride so far in 2024, and Tuesday was the worst day yet, with weaker sentiment underlined on Wednesday by a move on Wall Street’s “fear gauge” to a two-month high.
The CBOE VIX volatility index jumped 4.8% to 14.5 on Wednesday ahead of the market open. The ProShares VIX Mid-Term Futures ETF (NYSE:VIXM), an exchange traded fund that attempts to mirror the performance of the volatility index, was up 2.4% on Wednesday at 16.39.
While 14.5 isn’t historically high, it is significant in being the highest reading since Nov. 14, 2023, when the index was dropping sharply from levels above 20.
A VIX above 20 is seen as a level indicating “fearful” market conditions, marked by volatility and downside pressure on equities.
When the VIX was last above 20 on Oct. 30, it was at the start of a sharp two-month downturn that coincided with strong gains on global equity markets. As the VIX tumbled from around 21 in late October to around 12 in December, the S&P 500 index put on 16%, as did the main ETF that tracks it — the SPDR S&P 500 ETF Trust (NYSE:SPY).