Wall Street’s “fear gauge” soared Wednesday morning after reports surfaced Tuesday of a leaked memo from former FBI Director James Comey that suggested that President Donald Trump was trying to interfere in the department’s investigation into former National Security Adviser Michael Flynn.
Trump asked Comey to stop investigating Flynn for his ties to Russia, according to The New York Times. The reports have sparked a great deal of outcry from lawmakers, the media and the general public.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), also known as Wall Street’s “fear gauge,” soared to 12.8 points Wednesday morning, setting itself on course for the biggest one-day percentage gain in the index since August, Reuters reports.
“Equity investors are beginning to display concerns over the domestic political situation that is not likely to suddenly vanish,” Chief Market Economist at First Standard Financial Peter Cardillo told reporters.
Prior to Wednesday’s bump, the VIX dropped over 7 percent on May 8, marking its lowest level on a closing basis since December 1993. The index historically hovers around 20 and has only closed in the single digits on 10 other occasions, MarketWatch reports. (RELATED: Wall Street “Fear Gauge” Drops To Historic Levels)
CBOE is calculated based on the prices of stock options 30 days in the future on the S&P 500. The two typically have an inverse relationship, meaning when one goes up the other ticks down.
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