On Wednesday, December 18, 2024, in New York, the United States, a TV station broadcast live the Federal Reserve’s interest rate cut on the floor of the New York Stock Exchange (NYSE).
Michael Nagel | Bloomberg | Getty Images
On Wednesday, Wall Street’s fear index, the VIX, soared to its second-highest level in history after the Federal Reserve said it would scale back interest rate cuts.
this CBOE Volatility Index It surged 74% to close at 27.62 points, up from around 15 points earlier in the day. The surge was the second-largest in history, trailing only the 115% jump in funds tracking the VIX to above 37 points in February 2018.
Wednesday’s move comes after the central bank said it may cut interest rates only twice next year, down from the four expected in September, alarming investors hoping low rates will continue to fuel the bull market. The Dow Jones Industrial Average fell 1,100 points, its tenth consecutive loss.
Generally, a VIX value greater than 20 indicates a higher level of fear in the market. However, the VIX has been held below that level for much of the year, worrying investors who believe the market is too complacent.
VIX is calculated based on the prices of put and call options on the S&P 500 Index.
CBOE Volatility Index, 5-day
Still, the VIX is set for another sharp rise in 2024. It rose about 65% and closed above 38.
On Thursday, the VIX index hovered above the 20 mark for the last time, down more than 25% from the previous day.
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