Be wary of further turmoil due to the biggest rise in the US stock “fear index” ever, and the market plummets

8/6/2024 8:38 AM GMT+9

The Chicago Options Exchange (CBOE) volatility index (fear index, VIX) (.VIX), which shows investors' anxiety, recorded the biggest rise ever during trading hours on the 5th. The closing price was at a high level since October 2020.
As risk aversion movements spread globally due to concerns about the US recession (economic recession), demand for hedging to prepare for market volatility increased.
VIX rose to 65.73 at one point. It was about 42 points above the closing price on the 2nd of the previous weekend. After that, they were pushed back, and they closed at a high level of 38.57 for the first time in about 4 years.
The US stock market continued to drop drastically on the 5th, and the S&P Comprehensive 500 (.SPX) temporarily depreciated by over 4%.
The rise in VIX far exceeded the fluctuation range during past market sharp declines, such as mass sales related to the novel coronavirus in March 2020, when S&P fell 10% or more per day.

Joe Tigay, portfolio manager at RATIONAL EQUITY ARMOR FUND, pointed out that VIX movements in response to a 3-day continuous decline in US stocks were “extremely rare.” “There is no doubt that something broke [on the market] last week, and it seems like it will take time to repair this damage,” he said.