VIX volatility spikes as traders weigh AI risks over interest rate fears in US stock market.

The Cboe VIX Index jumped to 18 amid increased options trading, reflecting heightened market concern over AI-related risks rather than interest rate hikes. Despite a 90% chance of a Fed rate increase this week, volatility linked to interest rates has eased, while AI fears dominate traders' focus, especially in tech stocks like semiconductors and data centers. This shift indicates investors see AI as a more immediate threat to market stability than future rate changes. Meanwhile, bond market volatility remains high but hasn't significantly impacted stock volatility pricing.