VIX Jump Falls Well Short of Levels Hit in Past Bouts of Turmoil

The worst day for US stocks since April sent volatility gauges sharply higher, but left them far below levels that have accompanied past bouts of prolonged equity selling.

The Cboe Volatility Index shot above 21 for the first time in more than two months after President Donald Trump’s threat for a “massive increase” in tariffs on Chinese goods sent the S&P 500 down more than 2%. The VIX moves inversely to the S&P 500 about 80% of the time.

Equity volatility has been muted since April, with the VIX often pinned below 17 — its long-term average is ...