Wall Street 'fear gauge' tumbles, threatens to notch fresh record low

01/03/18 03:41 PM EST

A popular measure of volatility on Wall Street fell sharply lower Wednesday afternoon, plumbing fresh depths toward a record close early in 2018. The Cboe Volatility index , sometimes referred to as Wall Street's "fear index," fell 8.2% to 8.97, hitting its lowest level since Dec. 20. Wednesday marks only the fifth time in history that the Vix has dropped below 9, according to FactSet data. If the Vix ends at current levels, that will mark the lowest close in its history. The index has dropped nearly 19% over the past two sessions, putting it on track for its biggest weekly percentage drop since August, extending into the new year a protracted period of meager volatility in equity markets. The Vix, which is based on options activity and measures expectations for S&P 500 volatility over the coming 30 days, typically has an inverse correlation with stock prices. Major indexes have gained in both sessions of this holiday-shortened week, hitting record levels. The Dow Jones Industrial Average is up 0.3% while the S&P 500 has risen 0.6%. The Nasdaq Composite Index is up 0.8%, and is up 2.4% thus far this week. The Vix has been abnormally low for years. Not only is it trading at less than half its long-term average of 20, but of the 56 lowest closing levels in the history, according to data from S&P Dow Jones Indices, 47 of them occurred over the past year.

-Ryan Vlastelica; 415-439-6400; AskNewswires@dowjones.com


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01-03-18 1541ET

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