Market Extra: Wall Street’s fear gauge jumps the most in 5 months


Wall Street’s so-called fear index is starting to tick higher.

The CBOE Market Volatility Index

VIX, +20.55%

or VIX, on Monday climbed above the 20-level for the first time since March 1 on rising uncertainty in global markets.

The VIX—used in financial markets as a measure of fear or volatility—added 3.53 points, or 21%, to 20.55 in recent trade, which would mark its biggest one-day rise since Jan. 7, according to FactSet data.

Jitters about the state of the global market, reflected in the yields of sovereign bonds, which have touched record lows, have fostered concerns about the health of markets across the world as central banks employ unconventional measures to boost flagging economies. Bond prices move in the opposite direction of yields.

In addition to government bonds, haven assets like gold futures

GCQ6, +0.76%

 and the

USDJPY, -0.69%

 yen have been in high demand lately.

Check out: Gross says negative yields will lead to ‘supernova’-like market implosion

Markets have been on edge since last August when stocks tumbled amid fears about China and slumping crude-oil futures. Those longstanding concerns have been reignited ahead of a highly anticipated vote that could determine if the U.K. remains a member of the European Union. The U.K. vote, known as Brexit, is slated for June 23, with a decision in favor of leaving the EU threatening to destabilize the European trading bloc.

Among other factors stoking anxiety are a series of central-bank meetings by the Federal Reserve, the Bank of England and the Bank of Japan, which are slated for later this week.

Vote: Should the U.K. leave the European Union?

The Fed will conclude its two-day policy meeting on Wednesday.

Read: ‘Dot plot’ to be best gauge of Fed’s mood after jobs debacle

The S&P 500 index

SPX, -0.66%

which had been marching toward fresh records, was down 12 points, or 0.6% at 2,083, while the Dow Jones Industrial Average

DJIA, -0.58%

 was fell more than 100 points, or 0.6%, at 17,753 and the Nasdaq Composite Index

COMP, -0.79%

 was off 0.7% to 4,859.

U.S. stock markets were following a slump in Asian markets, where Japan’s Nikkei

NIK, -3.51%

ended 3.5% lower.

Exchange-traded funds that track moves in fear, or volatility, also traded higher. The VelocityShares Daily 2x VIX Short Term ETN

TVIX, +22.96%

 spiked 24% in recent trade, representing its largest single-session climb in 16 months.

It is worth noting that despite the uptick in the VIX, a measure of the longer-term trend for the indicator, its 200-day moving average, has been signaling lowered signs of market worry over the course of the past year, as the following FactSet chart shows:

Source: FactSet

Markets tend not to really put emphasis on moves in the VIX until it exceeds 20, but a big pickup in the gauge can presage mounting concerns about the stock market’s ability to ascend.

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