'Fear Gauge' Hits New Highs as Dow Jones Industrial Average Plummets

The CBOE Volatility Index (VIX) is trading in territory not charted since late 2011

by Andrea Kramer

Published on Oct 15, 2014 at 10:26 AM
Updated on Apr 20, 2015 at 5:32 PM

It's been a volatile couple of weeks for U.S. stocks, and the recent downward momentum is continuing this morning. Amid escalating concerns about Ebola, plunging crude oil prices, and a flood of downbeat economic data -- including significant monthly drops in U.S. retail sales, producer prices, and New York area manufacturing -- the Dow Jones Industrial Average (INDEXDJX:DJI) was down nearly 370 points out of the gate, briefly breaching the 16,000 level to trade in territory not charted since mid-February. At last check, the blue-chip barometer has pared its deficit to 159 points, or 1%, to trade at 16,156.47, while the CBOE Volatility Index (VIX) -- also known as the market's "fear gauge" -- has skyrocketed amid huge volume, and the yield on the 10-year Treasury note is south of 2% for the first time in more than a year.

Specifically, the VIX jumped as high as 28.10 in early action, topping 28 for the first time since late 2011, but was last seen 13.4% higher at 25.84. Furthermore, more than 100,000 VIX futures traded within the first half-hour of trading, according to Russell Rhoads at the Chicago Board Options Exchange (CBOE). So far this month, the VIX has surged more than 58%, as the Dow and S&P 500 Index (SPX) have surrendered 5.2% and 5.7%, respectively. The tech-rich Nasdaq Composite (COMP), meanwhile, is on pace for the worst monthly hit, down 6.6%.

On the New York Stock Exchange, 2,404 equities are trading lower, compared to just 558 bucking the trend, resulting in an advance/decline ratio of 0.23. Likewise, 514 stocks have tagged new annual lows, compared to 11 scoring fresh peaks. Doral Financial Corp. (NYSE:DRL) is among the worst performers on the Big Board, down 8.2% at $6.14, after surging earlier this week on a favorable tax ruling. For the week, however, DRL remains 16.3% higher.

It's a similar setup on the Nasdaq, with 634 stocks trading higher, compared to 1,698 in the red, resulting in an advance/decline ratio of 0.37. Just 10 securities have notched new highs, while 227 are trading in new-low territory. The heaviest-hit on the index is U.K. drugmaker Shire PLC (ADR) (NASDAQ:SHPG), amid reports that its merger with AbbVie Inc (NYSE:ABBV) is in jeopardy. At last check, SHPG has plummeted 22.3% to $190.07.

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