MW As the stock market reaches new record highs, Wall Street's 'fear gauge' also is rising. Here's what that means.

By Gordon Gottsegen

The VIX doesn't usually rise when the market is closing at records

The Cboe Volatility Index, known as Wall Street's "fear gauge," is moving higher today.

The stock market has been on a tear this week, with the three major U.S. indexes on Wednesday all aiming to close at record highs for a fourth trading day in a row.

If the Dow Jones Industrial Average DJIA, S&P 500 SPX and Nasdaq Composite COMP hold these gains after today's Federal Reserve interest-rate decision and through the closing bell, it would mark the first time the three indexes all achieved record closes for four days in a row since Nov. 3, 2021 - the date the central bank outlined plans to trim its COVID-19 pandemic support for markets.

Yet despite the recent market elation, there could be some uneasiness underneath the surface. The Cboe Volatility Index VIX, often referred to as Wall Street's "fear gauge," was also trading higher on Wednesday.

The VIX measures the expected volatility in the S&P 500 over the coming 30 days. It does so by looking at the premiums traders are willing to pay for call options and put options. So, a higher VIX means traders expect higher volatility in the near term.

Today's Fed meeting also adds context for the bump in the VIX. Stocks tend to be volatile on days the Fed holds its FOMC press conference, so a rising VIX could point to investors preparing for those swings.

Typically, the VIX moves in the opposite direction of the stock market, and it's somewhat unusual for the VIX to move higher on the same day the S&P 500 ends at a record.

Of note, the Fed is widely anticipated to cut interest rates on Wednesday, but it's also expected to provide more guidance on the end of its shrinking of its balance sheet. The U.S. central bank has been slowly draining liquidity from markets since its balance sheet reached a near $9 trillion pandemic peak. That era now looks near an end.

See: The Fed looks set to end its massive market intervention. Can it do that without spooking traders?

Bigger picture, the S&P 500 has closed at a new record high 871 times since 1990, according to Dow Jones Market Data. Of those 871 times, the VIX has ended the same day higher 281 times, which is about 32.3%. That means the VIX more often ends lower on record days for the S&P 500.

With VIX increasing at the same time as the S&P 500, it points to more investors bracing for volatility as stocks keep breaking records. This comes as the Fed has been working to guide the economy toward a "soft landing" in the years following the pandemic.

-Gordon Gottsegen

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October 29, 2025 13:28 ET (17:28 GMT)

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