Runnin' scared: VIX fear gauge spikes 35%

August 18, 2011: 6:12 PM ET
vix

Click the chart for more on VIX.

NEW YORK (CNNMoney) -- Wall Street's key measure of volatility, the VIX, soared 35% Thursday following a quartet of downbeat economic reports and a dour outlook from Morgan Stanley.

The CBOE Volatility index (VIX) jumped to close at 42.7 as all three major U.S. stock indexes plummeted. A VIX reading higher than 30 is considered a sign that investors are getting worried.

A gloomy report from Morgan Stanley renewed fears about a slowing global economic recovery, sending markets lower across the world. The bank warned that the U.S. and Europe were "hovering dangerously close" to a recession over the next 6 to 12 months.

Perhaps most damning, Morgan Stanley said "policy errors" in both the U.S. and Europe had led to the global downgrade. However, the bank did say any recession would not be as severe as the one that crippled world economies in 2008.

Pass the Pepto. Market volatility here to stay.

European markets took a dive on the news, setting the stage for a sour U.S. stock open. Then four stateside reports delivered even more bad news. Jobless claims, home sales, inflation and Philadelphia regional manufacturing activity all fared worse than had been expected.

Stock indexes -- and the VIX itself -- have seesawed over the past several days. Trading volumes began soaring after Standard & Poor's downgraded the U.S. credit rating, and a flurry of news since then has sent stock indexes swinging hundreds of points in both directions.

Those wild intraday and day-to-day moves have put investors, and the VIX, into a tizzy. The fear gauge hit a two-year high last week at 48 after the S&P downgrade.

Year-to-date, the VIX is up more than 140%. But even at recent highs, the fear gauge is still way below the peak level of almost 90 hit in October 2008 -- after Lehman Brothers collapsed.  To top of page

Index Last Change % Change
Dow 17,640.73 283.86 1.64%
Nasdaq 4,717.87 73.56 1.58%
S&P 500 2,044.82 31.93 1.59%
Treasuries 2.21 0.06 2.79%
Data as of 12:39pm ET
Company Price Change % Change
Bank of America Corp... 17.40 0.13 0.78%
Apple Inc 111.25 1.84 1.68%
Oracle Corp 44.54 3.38 8.21%
General Electric Co 24.93 0.50 2.05%
Halliburton Co 39.03 -0.41 -1.04%
Data as of 12:24pm ET
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.07%4.07%
15 yr fixed3.13%3.09%
5/1 ARM3.22%3.08%
30 yr refi4.12%4.12%
15 yr refi3.19%3.16%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.