Volatility Spike

Volatility spike means a sudden increase in market volatility. In simple terms, prices start moving up and down more sharply than usual. A volatility spike is important because it often shows rising uncertainty, fear, or rapid repricing in markets. It can make investors more cautious and force some funds to reduce risk. For example, if stocks fall sharply after unexpected inflation data and price swings increase, the market may experience a volatility spike. A volatility spike does not always last. Volatility can calm down if investors gain clarity or if the news is less damaging than feared.