US stock markets are on track for their worst ever January, with the S&P 500 index down roughly 10% since the start of the year.
But after a remarkably solid 2021, and 2020, just how nervous are investors actually feeling today? One measure worth checking is the Volatility Index, also known as the "fear index".
The Volatility Index — or VIX — is a good indicator of how nervous markets are because it tracks how much investors expect stock prices to fluctuate over the coming month. When the VIX is higher it means investors expect prices to move around a lot (i.e. they're more uncertain), and when it's lower it means they don't expect prices to move around much.
The latest reading on the VIX is about 30, which is well above the average of about 18-19 from the last 15 years, but still some way from the readings of 80+ during the "call your family and go full panic mode" of the global financial crisis of '08-09 or March 2020.
Reasons to worry
If the market was a person, telling a friend everything they were worried about, they'd have a lot to say:
Inflation is rising around the world, for the first time in a long time.
Tensions between Ukraine, Russia and NATO are rising.
The pandemic hasn't gone anywhere, with the ongoing risk of new variants.
Figuring out which of those is most responsible for the market jitters on any one day is more art than science, but all 3 together certainly aren't helping.
