The market’s most widely followed gauge of fear and uncertainty edged higher on Monday, with investors on edge ahead of the penultimate trading session of 2024.
The Cboe Volatility Index, which tracks S&P 500 options contracts and trades under the ticker VIX, climbed 6.4% to just under 17 in early trading. Any reading of above 20 indicates heightened volatility, so the move suggests Wall Street is becoming more skittish.
A couple of issues are making traders anxious. Sticky inflation means the Federal Reserve is likely to take a cautious approach to slashing interest rates in 2025, which could particularly drag on the high-growth tech and AI stocks that have powered the market’s stellar gains over the past two years.
The mounting deficit is another worry. On Friday, Treasury Secretary Janet Yellen said the government will hit its borrowing limit next month, which would trigger the use of “extraordinary measures” to stop a U.S. default and could lead to another debt-ceiling standoff in Congress.