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A closely watched measure of expected stock-market volatility jumped to its highest reading since May on Tuesday, as the S&P 500 renewed a selloff to trade at its lowest since early June.
The Cboe Volatility Index
VIX,
known by its ticker symbol “VIX,” was up more than 2 points near 19.33 late Tuesday. That would surpass its Aug. 17 closing high of 17.89 and mark its highest finish since May 24, according to FactSet.
The VIX, derived from S&P 500 index options, is a measure of expected volatility over the coming 30 days. The index has been subdued in 2023, trading well below its long-term average near 20, as stocks rallied. It has moved higher as stocks have set back, with the S&P 500 down more than 5% from its 2023 high set on July 31.
Earlier: What the ‘mysterious shrinking’ of Wall Street’s fear gauge means for stocks, according to DataTrek
The S&P 500
SPX
dropped 1.5% to close at its lowest since early June, according to FactSet. The Dow Jones Industrial Average
DJIA
finished with a loss of around 388 points, or 1.1%, ending below its 200-day moving average for the first time since March.
“Oil is +34% since June, the yield on the 10-year [Treasury note] has gone from 3.7% to 4.5% without a rate increase from the Fed, Credit card balances have exceeded $1 Trillion, and student loan payments go live again next month at a clip of about $400 a month for 30 million people,” said Alex McGrath, chief investment officer for NorthEnd Private Wealth, in emailed comments.
“This stagflationary set up has seen the VIX jump 40% in the month of September and suggests we will see volatility through the end of the year,” he said.
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