US stocks experienced a "Black Friday" selloff, with the S&P 500 and Nasdaq Composite closing down 2.71% and 3.56% respectively, marking their largest single-day declines since April. The Dow Jones Industrial Average fell 1.9%.

The worst single-day performance for US equities since April sent volatility measures sharply higher, though levels remained well below those typically associated with sustained selloffs. The Chicago Board Options Exchange Volatility Index (VIX) surged 31.65% on Friday to 21.63, breaking above 21 for the first time in over two months. The VIX index moves inversely to the S&P 500 approximately 80% of the time.

Since April, US equity volatility has been suppressed, with the VIX frequently staying below 17 (compared to its long-term average of 20) while the S&P 500 posted five consecutive months of gains. According to Citi equity and derivatives trading strategist Vishal Vivek, prior to Friday, the S&P 500 had gone 100 trading days without a single-day move exceeding 2%.

"When you have a period of calm volatility followed by a pullback like today's driven by a headline that concerns investors, it's not surprising to see the VIX rise significantly," Vivek noted.

While the VIX jump appeared dramatic relative to recent trends, the move represents only a "minor ripple" compared to historical market turbulence. During the 2008 financial crisis, the VIX broke above 89, and it rose above 85 during the early stages of the COVID-19 pandemic. The indicator touched 50 after Trump announced additional tariffs on trading partners on April 2, 2025.

Mandy Xu, head of derivatives market intelligence at CME Group's global markets division, said a VIX level of 21 "is not cause for concern." She explained: "It's normal to see some degree of price repricing driven by news, but the market hasn't fallen into panic."

Derivatives traders also viewed the selloff process as relatively orderly. Alex Kosoglyadov, managing director of global equity derivatives at Nomura Holdings, stated: "We haven't seen clients rushing to buy protective positions." He noted that with option market long and short positions remaining relatively balanced, market makers and dealers were well-prepared to handle rising volatility. "Dealer positioning is very clean, with books more balanced compared to the selloff periods in April 2025 or August 2024."

Despite clear signs of US labor market slowdown, government shutdown concerns, and growing worries about Federal Reserve independence, the S&P 500 had not experienced a single-day decline exceeding 1% since early August prior to Friday. Whenever US stocks declined, dip buyers quickly entered the market, betting that artificial intelligence trading would continue to offset macro-level concerns.

"There are strong support forces in the market - every time there's a decline, it gets quickly pushed higher by buying," said Vuk Vukovic, chief investment officer and co-founder at Oraclum Capital LLC. "This drop was a bit larger, but we're still at levels from two weeks ago, so there's not much drama."

He added: "This feels more like an opportunity for volatility sellers to enter rather than a moment for hedging."