The announcement of new tariffs set to commence on February 1 has injected a wave of uncertainty into the US equity markets, prompting a risk-off sentiment among investors. This has led to a deterioration in the S&P 500's breadth, with sectors like energy facing significant declines. The market's reaction is driven by concerns over increased costs and potential earnings pressures, causing value stocks to underperform growth stocks and small caps to trail behind large caps. The heightened uncertainty has spurred a notable rise in the VIX, reflecting investors' growing demand for protection against potential market downturns. The increase in implied volatility and put selling further highlights the cautious stance traders are adopting as they reduce equity exposure ahead of the weekend, wary of geopolitical tensions.
The iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) experienced a rise, closing at $44.12, up 3.37% from the previous close of $42.68, and currently trading at $44.07 as of 16:20 on Friday, January 31.