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 percentage on record after the Federal Reserve shocked stocks by saying 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. Dow Jones Industrial Average Plunged 1,100 points This is the 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. August 5, 2024At that time, concerns about the US economic recession and the sharp unwinding of Japanese yen carry trades caused the VIX index to rise by about 65%, closing above 38 points.
On Thursday, the VIX index hovered above the 20 mark for the last time, down more than 25% from the previous day.
