Wall Street ‘fear index’ soars 27% after Silicon Valley Bank debacle
The intervention of the Californian bank Silicon Valley Bank (SVB) by the U.S. authorities following its debacle in the New York Stock Exchange has provoked a 27 % rise in the index VIX volatility index, also known as the fear gauge on Wall Street.
The debacle of SVB, which despite being a bank with offices in only two states . (California and Massachusetts)has awakened the fear of some investors that it could be the prologue to a new crisissince it is considered the largest bank failure since the 2008 crisis and one of the largest in U.S. history.
Others, however, see its fall as a response to the idiosyncrasies of this companywhich, during the pandemic, invested in long-term Treasury Bonds and venture capital firms. The fact is that it has dragged other banks such as Signature Bank, First Republic Bank, Western Alliance or PacWest and has affected large corporations financial corporations both at home and abroad.
The VIX, which has not reached such lofty heights since last October, is also known as. the fear index because it measures expectations of volatility and uncertainty of investors and serves as a tool to gauge market sentiment. When the VIX is low, it suggests that investors are relatively optimistic and more confident. in future market conditions.