Stock Volatility Jumps to Highest Since Covid Pandemic as Selloff Deepens

One measure of stock market volatility surged to its highest level since the early days of the Covid-19 pandemic on Monday morning as stocks across the globe continued to suffer big losses.

The Cboe Volatility Index (VIX) jumped above 60 on Monday, the highest the “fear index” has been since March 2020. It is the index’s highest reading outside of two distinct market meltdowns: the onset of Covid-19 and the fallout from the failure of Lehman Brothers in September 2008.

Stocks abroad sold off on Monday, with British and German indexes each down about 3% and the Japanese Nikkei 225 tumbling more than 12%. U.S. stock futures pointed to steep losses on Wall Street as well, with the Dow on track to shed 3% at the open and the Nasdaq 100 barreling toward a 5% decline.

Volatility has picked up in recent weeks amid a reset of stock market leadership and growing anxiety about a slowing U.S. economy. Mega-cap tech stocks have sold off several times since a soft inflation report in mid-July sparked a rotation into the small-cap stocks poised to benefit most from interest rate cuts.

And fear was ratcheted up last week when several reports pointed to a softening labor market, prompting some to wonder whether the Federal Reserve has waited too long to start cutting rates.