Fear gauge surges as AI chip selloff spreads across Wall Street
The VIX jumped as a rout in chip and AI stocks dragged the wider market down, in one of its sharpest one-day moves since 2024.
Picture: Fear gauge surges as AI chip selloff spreads across Wall Street
The VIX exploded almost 12 basis points today to 28.2%. Only on three occasions since 2024 did the "fear index" produce a bigger jump:
Mon, Aug 5, 2024: yen carry trade unwind. The Bank of Japan raised rates and signaled more hikes on July 31, which sent the yen sharply higher. Then a weak July jobs report on Aug 2 (about 114k jobs, unemployment up to 4.3%) triggered the Sahm rule recession signal and fed growth fears. Traders who had borrowed cheap yen to buy global stocks rushed to close those trades. Japan’s Nikkei fell over 12% that Monday, its worst day since 1987. The VIX jumped 15 points and closed near 38.
Wed, Dec 18, 2024: hawkish Fed cut. The Fed cut rates by a quarter point, but its projections showed only two cuts for 2025 instead of four, and it raised its inflation forecast. Powell’s press conference reinforced that message. The S&P 500 fell about 3%, and the VIX jumped roughly 12 bps to 27%.
Thu, Apr 3, 2025: tariff shock. President Trump announced sweeping “reciprocal” tariffs after the close on April 2: a 10% baseline plus much higher rates on many countries, including China and the EU. Markets had hoped for something narrower. The S&P 500 fell nearly 5%, and the VIX increased over 15 points to 45%.
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