Investors are watching several market stress gauges as a tech stock rout tied to doubts about the AI trade unfolds. The Reuters report says the tech-heavy Nasdaq 100 rose nearly 2% on Friday, Nov. 6, after falling more than 6% on Thursday.
The Cboe Volatility Index, Wall Street's fear gauge, rose above 28 on Thursday, its highest since late March. The report says it was holding near that level on Friday and has surged more than 40% this week. It also says the increase is relatively contained compared with the selloffs after "Liberation Day" in April 2025 and in August 2024. The European equivalent hit its highest level since May on Friday.
The most acute warning sign, according to the report, is in credit markets. The cost of insuring debt issued by neocloud firm CoreWeave has spiked into distressed territory. Five-year credit default swap spreads have passed 1,000 basis points, a record high. Spreads on credit default swaps for SpaceX and Intel also jumped this week.
The premium for holding US junk bonds has risen to its highest level since the Liberation Day selloff. For the riskiest companies, rated CCC or lower, the premium is near its highest since 2020, according to ICE BofA indices.
Other measures show less strain. US 10-year Treasury yields have fallen 50 basis points from peaks above 5% reached last month. The report says bond market volatility measured by the MOVE index hit a six-month high in October but has since eased. Swap spreads, which can signal funding stress, have stayed calm.
Idanna Appio, a portfolio manager at First Eagle Investments, said, "It's still early days," adding that her concern would be more volatility spikes, more stress, and "real issues with the ability to access markets."