Fear Index Rises for Stock Market as Nasdaq Climbs 0.8%
Quick overview
- Stocks are experiencing gains on Thursday, with the Nasdaq Composite up 0.8% after a week of declines.
- The CBOE Volatility Index (VIX) has also risen, indicating increased investor anxiety over inflation and market instability.
- TSMC's strong earnings report has provided a boost to the tech market, alleviating some fears surrounding AI profitability.
- Despite the market's recovery, analysts warn that rising inflation and geopolitical concerns may lead to further volatility.
Stocks are up for Thursday after a low start to the week, but the CBOE Volatility Index (VIX) or “fear gauge” is up as well as investors worry about inflation and market instability.
The Nasdaq Composite added 0.8% to its total on Thursday morning, recovering slightly from days of decline. The Dow only gained 0.1% but the S&P 500 added 0.4%. Gains across the market were partially attributed to TSMC’s excellent earnings report and what that means for the wider tech market.
Several consecutive days of losses for the stock market set the week off to a bad start, but as the market compensates for those losses, we should see the major indices climb throughout the day. This should not be seen as the start of a rally, though, as the fear index is climbing as well, demonstrating investor anxiety in changing economic conditions.
Why Is the VIX Fear Gauge Up Today?
This gauge that measures investors’ fears, known as VIX, is a way to determine how volatile the market is expected to be in the coming weeks. That gauge rose 1.69% over the last 24 hours, which brings the gauge to 16.25. Now, investors should know that any reading of 20 or below indicates that the market is fairly stable, and readings closer to 30 show strong instability. The current reading tells us that the market is still in a place of stability but that it is changing.
One of the reasons for the latest increase of the gauge can be attributed to rising inflation, which stems from this week’s CPI (Consumer Price Index) report as well as from poor showings by many of the major banking institutions during a very important earnings season for that market.
Wall Street analysts have also pointed out that investors are worried about potential U.S. military involvement in Iraq as well as continued uncertainty over tariffs. The gauge is not in a place of strong concern yet, but it is growing closer, and investors may not want to wait until it rises above a reading of 20 to start to make their moves to protect their portfolios.
AI Market Fears Allayed
Investors can take hope in the latest earnings report from TSMC (TSM) which showed that the Taiwanese semiconductor company broke their own records with a 35% increase in earnings for the most recent quarter. That is a strong finish to 2025, especially in the face of months of AI market fears and investors’ concerns over profitability in the market.
The chipmaker works for Apple and Nvidia, among others, crafting essential components for their products. They recorded $16.01 billion in revenue, which was considerably more than the Wall Street estimates for the company heading into the earnings release.
This bodes very well for the AI market in general, as it shows that one of the top players is capable of earning incredible profits even this late in the spread of AI. For months, investors have been worried that AI-related companies are not earning the expected profits and are instead pouring all their profits into research and product costs, but TSMC has solidly bucked the trend and demonstrated profitability at a key time.
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