Click the chart for more data on the VIX. By Ken Sweet, contributing writerApril 18, 2011: 11:44 AM ET
NEW YORK (CNNMoney) — The VIX index, commonly known as Wall Street’s “fear gauge,” soared nearly 20% on Monday, following the news that S&P was downgrading its outlook of the United States’ “AAA” credit rating.
The VIX (VIX) was up 19.6% to a reading of 18.32 — its highest level in three weeks. However, the fear gauge is still well below the elevated levels it hit in mid-March, when the nuclear catastrophe in Japan became frontpage news.
On Monday, a report was released stating the S&P was lowering the U.S. credit outlook for America’s long-term rating to “negative” from “stable,” based on the uncertain political debate around the nation’s fiscal problems.
“The outlook reflects our view of the increased risk that the political negotiations, over when and how to address both the medium- and long-term fiscal challenges, will persist until at least after national elections in 2012,” said S&P credit analyst Nikola Swann.
The news sent the Dow falling more than 200 points, bond yields to rise, and gold to spike to near $1,500 an ounce.
Wall Street’s “fear gauge” tends to spike at times of heightened uncertainty and fall when investors’ fears ease. The VIX index hit an all-time high of 90 during the height of the financial crisis.