The VIX had a huge day.
The volatility index, which measures how much traders expect the S&P 500 to move over the next month, gained more than 10% today amid the market’s sharpest sell-off in over a month. Over the last three days, the VIX has gained more than 14%.
Volatility has been absent from Wall Street for some time now, but today’s action showed that volatility may be slowly returning to equity markets.
The initial sell-off at around 1:00 pm EST was attributed to a Wall Street Journal report that Syrian warplanes struck targets in western Iraq. Bears really gained control of the day later in the session, a slide that seemed to have almost no news attached.
With volatility depressed over almost an entire quarter, it seems unlikely that its return to the market will come in steady or measured steps.
All things considered, however, today’s session wasn’t a big deal. Only in the context of the recent lullaby market would a 120 point move in the Dow and 0.6% move in the S&P 500 feel like a crash.
Certainly makes you wonder if we’ve forgotten what real market volatility looks like.