Understanding Market Fear: The VIX Explained
The VIX, or volatility index, is a forward-looking indicator of expected stock market volatility over the next 30 days. Often called the "fear index," it's calculated by the Chicago Board Options Exchange (CBOE) based on the implied volatilities of S&P 500 index options.
The chart shows the VIX usually hovers around a score of 20. It has been much higher during times such as 2020 when the country was grappling with COVID and in 2008 during the financial crisis. The VIX score was over 80 during those times.
What are we at now? Mid-20s. While the VIX did spike earlier in April due to tariff and economic fears, the outlook appears to be more tame now.
The VIX's tendency to rise during economic downturns and fall during booms highlights how uncertainty and fear drive market volatility during challenging economic times.
Source: https://fredblog.stlouisfed.org/2025/02/measuring-fear-what-the-vix-reveals-about-market-uncertainty/
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THE MONTH IN BRIEF
U.S. Markets
Stocks were mixed as buyers emerged late in the month, thanks to solid corporate reports and unexpected trade news.
The Standard & Poor’s 500 Index declined 0.76 percent while the tech-heavy Nasdaq Composite rose 1.26 percent. The Dow Jones Industrial Average lagged, however, falling 3.17 percent.1
1. WSJ.com, April 30, 2025.
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S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. The Dow Jones Industrial Average is a widely watched index of 30 American stocks thought to represent the pulse of the American economy and markets. The NASDAQ is an index that tracks the cumulative results on a market capitalization basis of all stocks trading in the NASDAQ system. Investors cannot invest directly in an index. Past performance is no guarantee of future results. 5/25