Volatility In Markets Increases Sharply Amid Recession Concerns

US stocks closed sharply lower on Thursday, with major indices recording their biggest daily percentage decline in weeks.

The Federal Reserve raised its target fed funds rate by 0.5% to a new range of between 4.25% and 4.5%, in light with expectations from Wall Street. However, the central bank also expected rate increases through next year with no cuts until 2024.

The Bank of England and the European Central Bank also raised their interest rates on Thursday.

Investors also monitored economic reports, which showed a higher-than-expected drop in retail sales in November. US initial jobless claims also dropped by 20,000 to 211,000 in the week ending December 10.

All the major sectors on the S&P 500 closed on a negative note, with communication services and information technology stocks recording the biggest plunge on Thursday.

The Nasdaq 100 dipped 3.37% to close at 11,345.22 on Thursday, amid losses in shares of Apple Inc (NASDAQ: AAPL), Amazon.com, Inc. AMZN and Tesla Inc TSLA. The S&P 500 fell 2.49%, while the Dow Jones lost 2.25% to 33,202.22 in the previous session.

The Chicago Board Options Exchange's CBOE Volatility Index (VIX) jumped 11.8% to 23.64 points.

What is CBOE Volatility Index?

The CBOE Volatility Index, popularly known as VIX, is a measure of the equity market's expectation of volatility based on S&P 500 index call and put options.