The Cboe Volatility Index (VIX), often referred to as Wall Street’s fear gauge, has been experiencing significant spikes, hovering around 48 and reaching as high as 60. This index, which predicts S&P 500 volatility over the next 30 days, indicates a rising trend in its 30-day moving average, which recently registered at 21.4 compared to its long-term average of 19.5. The current volatility levels are now almost four standard deviations above the long-term average, reminiscent of market conditions seen during the crises of 2020 and 2008. Though the selloffs may appear similar, the underlying sentiment differs drastically. The 2008 crisis was marked by widespread mistrust in the financial system, while the 2020 downturn stemmed from global lockdowns. Today’s volatility, however, arises from different circumstances and can be swayed dramatically by political tweets, showcasing a unique market dynamic. This environment will likely lead to heightened attention on volatility and market fluctuations in the upcoming weeks.

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