The fear that engulfed the stock market after President Donald Trump's April 2 tariff announcement went away as quickly as it came. The CBOE Volatility Index, or VIX , known to many as Wall Street's "fear gauge," closed below 20 this week for the first time since late March. This comes after the VIX spiked to an intraday high of 60.13 and a closing peak of 52.33, as investors worried the broad U.S. tariffs would tip the economy into a recession. .VIX 1M bar VIX 1-month chart "After last closing above 40 just over a month ago, the CBOE Volatility Index (VIX) closed below 20 [Monday] in what was the shortest window between a close above 40 and a close below 20 in the index's history," strategists at Bespoke Investment Group pointed out. The VIX closed at 18.39 on Monday and has remained near that level since. Sentiment around trade gradually improved after the "liberation day" announcement. First, the White House announced a 90-day moratorium on reciprocal levies targeting goods from many countries, though that did not include China. Over the weekend, China and the U.S. agreed to temporarily lower duties on each other's goods while officials work on a broader trade deal. This sent the VIX down sharply and the major averages soaring week to date: Nasdaq Composite : up 6% S & P 500 : up 4% Dow Jones Industrial Average : up 2.2% Some more good news for investors: These sharp VIX reversals have been followed by a strong S & P 500 in the past. On average, the S & P 500 is up more than 8% six months after the VIX tumbled from a closing level above 40 to below 20, Bespoke data shows. One year out, the benchmark gains 9.2% on average. Expect the VIX to surge again if U.S.-China trade talks falter.
