Investor Alert

Dec. 3, 2021, 3:20 p.m. EST

Wall Street's 'fear index' shoots to highest level since January as S&P 500 skids lower, Nasdaq sinks toward correction

A measure of implied volatility on Wall Street on Friday touched the highest level since late January as the S&P 500 index (S&P:SPX) headed toward its second consecutive weekly loss. The CBOE Volatility Index (845:VIX) jumped by about 24% Friday, trading around 34.6, which would mark the highest level for the index since Jan. 27, according to FactSet data. The index, also known as the VIX, for its ticker symbol, has become well known as Wall Street's "fear index," since it was created in the early 1990s. The VIX itself, which uses S&P 500 options to measure trader expectations for volatility over the coming 30-day period, tends to rise as stocks fall and is often therefore referred to as a guide to the level of investor fear. It had been trading below its historic average of around 19.5 until concerns about the omicron variant of the coronavirus that causes COVID-19 emerged last week. This Friday, the VIX was headed higher in the culimination of a weeklong selloff in equities as investors reassessed a weaker-than-expected November jobs report as unlikely to stay the hand of a Federal Reserve that seems intent on tamping down inflation. Meanwhile, the Nasdaq Composite Index (NASDAQ:COMP) , off 2.7%, was seeing the most significant selling pressure, among the main three stock benchmarks, bringing the index down more than 6% from its Nov. 19 record peak.

Link to MarketWatch's Slice.