NEW YORK — Futures tied to Wall Street’s fear gauge on Wednesday sent a signal that has historically marked intense selling pressure in markets, but has sometimes preceded stock market rebounds.

The October VIX futures rose 0.28 points above the November futures on Wednesday, the widest margin since mid-June, after Wall Street’s main indexes sold off following a 75 basis point interest rate hike by the Federal Reserve.

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VIX futures, which plot volatility expectations for several months ahead, normally remain upward sloping, with near-term futures relatively less pricey than those that target coming months.

An inverted curve, when near-dated contracts are more expensive than later dated ones, suggests investors are growing more worried about near-term events, raising the cost of hedging.

Such a signal has occurred prominently five times since 2020, with two instances followed by market rebounds, including the most recent one in mid-June.

“It’s usually a sign all the risk is being pulled into the here and the now,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group.

“That’s why often we will look at it as a capitulation indicator,” Murphy said.

The two nearest VIX futures last inverted in June, amid a bout of intense selling that drove the S&P 500 to its bear market low. The index rebounded 17% soon after, though most of that rally has been reversed on fears the Fed will be more hawkish than previously anticipated.

While an inversion this time may indicate intensifying selling pressure, it does not necessarily signal an immediate end to the market’s recent slide, Murphy said. For instance, the two front month VIX futures remained inverted for a month – from mid-February through mid-March – before the stock market sell-off in the first quarter took a breather.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili, Chizu Nomiyama and Richard Chang)

NEW YORK — Futures tied to Wall Street’s fear gauge are close to sending a signal of growing fear that has sometimes preceded past stock market rebounds.

Wall Street’s main indexes opened lower on Monday, extending declines for a third straight session, on worries that another big interest rate hike by the Federal Reserve could tip the U.S. economy into recession.

Wall Street’s main indexes opened lower on Tuesday as investors positioned themselves for new economic projections and another large interest rate hike by the U.S. Federal Reserve this week to quell decades-high inflation.

Wall Street’s main indexes opened higher on Wednesday ahead of a widely expected hefty rate hike from the U.S. Federal Reserve, with investors awaiting cues on the length and depth of further policy tightening to tame surging price pressures.

Wall Street’s main indexes opened lower on Friday, heading toward June lows, as investors fretted over the prospect of an economic downturn and a hit to corporate earnings from the U.S. Federal Reserve’s aggressive monetary policy tightening to quell inflation.

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