Key Points
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The VIX volatility index has spiked in the wake of higher oil prices and war in Iran.
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Adding to the uncertainty, economic indicators are painting a mixed picture.
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Volatility will likely remain high without clarity on the Iran war’s trajectory.
Think the stock market in 2026 is starting to feel less like smooth sailing and more like whitewater rafting? You’re not wrong.
All three major indexes are down year to date, with the Dow Jones Industrial Average down 0.2%, the S&P 500 off 0.4%, and the Nasdaq Composite down 1.8%.
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About the only index that’s up — and it’s way up — is the CBOE S&P 500 Volatility Index (VOLATILITYINDICES: ^VIX), or VIX, which measures overall market volatility. It’s up a whopping 67% year to date as of this writing, and it could go even higher in the coming days as energy prices surge and the February Consumer Price Index (CPI) looms. Here’s what investors need to know.
A person with their hand over their mouth looks at charts on a pair of computer screens.
Image source: Getty Images.
A mixed picture
Market volatility refers to how much the overall market’s value fluctuates up and down. It often gets higher when external events create market uncertainty, which leads to frantic buying and selling. For example, the VIX’s biggest spike in the last five years occurred after President Donald Trump’s April 2025 “Liberation Day” tariff announcement, when it spiked to 52.3, as the market tried to figure out what kind of impacts the tariffs would have on businesses.
During the bear market of 2022, the VIX mostly bounced around between 20 and 35, but through 2023, 2024, and 2025, it mostly remained below 20, and it was sitting at just 14.5 on Jan. 1. However, recent events have caused it to spike again, and it currently sits at 25.
Conflicting reports
Part of the reason for the current spike in volatility is the conflicting signals the economy is sending. January’s jobs report was much stronger than expected, showing a net gain of 130,000 jobs, well above the consensus estimate of 55,000. But February’s job numbers, released on Friday, were terrible, showing a net loss of 92,000 jobs where economists had expected a slight gain, with the unemployment rate inching up to 4.4%. January’s total was revised down by 4,000 jobs.
Similarly, inflation continues to be a concern, but one of the bright spots in the inflation picture had been low gasoline prices. With the war in Iran causing global oil prices to spike, and an unclear timeline for when the war might end, the market isn’t sure how to factor the current high oil prices into its outlook. It’s also unclear whether a release from the Strategic Petroleum Reserve (SPR) is on the table. The reserve (which maxes out at 714 million barrels) is lower than normal (currently 415 million barrels) at the moment because it was never fully replenished after the last drawdown in late 2022.
A person with their hand on their forehead fills up a black vehicle at a gas station.
Image source: Getty Images.
Coming up…
Against this backdrop, February’s CPI numbers are scheduled for release on Wednesday. While it won’t include the recent spike in gasoline prices, it will nevertheless be closely watched to determine how other prices are faring. January’s CPI came in at 2.4% over the prior year, which was lower than December’s 2.7%. That didn’t trigger any movement in the VIX. But a higher-than-expected February number — or a moderate number resulting primarily from lower gasoline prices — will likely cause a spike in volatility.
Until there’s more clarity on the trajectory of the war in Iran — or an announcement that it’s over — investors should expect market volatility to remain elevated.
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