VIX Suddenly Through the Roof

Investor fear is never a good thing. It’s even worse when it’s caused by something as awful as what happened on Monday.

The CBOE Volatility Index (VIX) – a.k.a. the “fear gauge” – spiked 43% today, finishing at its highest level since late February. Initially, slowing growth in China’s GDP was the catalyst. Late in the day, however, an issue much closer to home caused fear to rise.

Two explosions at the Boston Marathon just before 3 p.m. on Monday left at least two people dead and another couple dozen injured. The shocking nature of the explosions – which may or may not have been a terrorist attack – reverberated on Wall Street.

The rise in the VIX was actually tapering off until news of the Marathon explosions began circulating. That prompted the index to advance another 17% in the final hour of trading – and causing stocks to have their worst day since November.

Entering the week, the VIX was nearing historic lows not reached since 2007. It closed last week at just over 12 after both the S&P 500 and the Dow Jones Industrial Average established fresh all-time highs. Now it’s above 17.

Not the turnaround investors were looking for. Frankly, though, what’s happening on Wall Street is a secondary concern to what’s happening in Boston at the moment.

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