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Key Takeaways
- The Cboe Volatility Index, or VIX, jumped Wednesday, a day after climbing steadily amid a semiconductor rout that weighed on the broader market.
- Markets were unsettled yesterday by disappointing manufacturing data and a sharp decline in Nvidia’s share price, which fell 9.5%.
- The VIX surged to its highest level since the early days of the COVID-19 pandemic last month as soft labor market data and a rate hike from the Bank of Japan came together to fuel a global selloff.
The Cboe Volatility Index (VIX) jumped Wednesday, extending yesterday’s rise amid a semiconductor selloff that weighed on the broader market.
In early trading Wednesday, the VIX, often referred to as the fear gauge, leaped above 23, its highest reading since the days after the global stock rout on Aug. 5. It rose steadily throughout the day Tuesday, climbing from a reading of about 15.5 to 20.7 by the end of the day as the S&P 500 slid more than 2% and the Nasdaq shed more than 3%.
Generally speaking, VIX readings below 20 reflect calm in the markets, while readings above 30 indicate heightened uncertainty and investor fear.
Markets were unsettled yesterday by manufacturing data that showed activity, which has been depressed by high interest rates, continues to be sluggish.
A selloff of semiconductor stocks also weighed on the broader market. The PHLX Semiconductor Index (SOX) slumped 7.8%, its largest one-day drop since March 2020, as investors mulled last week’s mixed earnings report from Nvidia (NVDA) and reports that Intel (INTC) executives are considering selling parts of the business to cut costs.
Nvidia’s Market Cap Took Record $279B Hit Tuesday
Nvidia led the semiconductor index lower yesterday, tumbling more than 9% and wiping a record $279 billion off the company’s market capitalization. Its shares continued to slip early Wednesday.
The VIX surged early last month to its highest level since the onset of the COVID-19 pandemic as stocks sold off after labor market data spooked investors and a surprise rate hike from the Bank of Japan prompted the unwinding of the massively popular yen carry trade.