The iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) is experiencing a notable uptick as market volatility surges amid concerns over China's DeepSeek AI program. The VIX, often referred to as the "fear gauge," has risen sharply, reflecting heightened investor anxiety about potential disruptions in the artificial intelligence sector. DeepSeek's emergence, with its cost-effective AI model, is challenging the dominance of U.S. tech giants, leading to significant pre-market declines in major tech stocks like Nvidia, Amazon, and Meta Platforms. This has fueled fears of a broader market deleveraging, as investors brace for potential margin calls and increased volatility.
The VIX's surge, up over 28% to 19.03, underscores the market's nervousness ahead of the U.S. stock market opening. The tech sector's vulnerability, exacerbated by DeepSeek's competitive threat, is contributing to the volatility, with Nasdaq futures down over 3% and S&P 500 E-mini futures dropping nearly 2%. The anticipation of the Federal Reserve's upcoming meeting adds another layer of uncertainty, as investors await guidance on interest rates and economic outlook. The combination of these factors is driving demand for volatility hedging, as market participants seek to protect their portfolios from potential downside risks.
The VXX ETF is currently priced at $44.99, reflecting a 7.79% increase from its previous close.