The stock market's fear gauge spikes 13% after Fed warns of prolonged labor-market damage

• Cboe's VIX index, investors' preferred gauge of stock market volatility, leaped as much as 12.7% on Thursday following the Federal Reserve's warning of a slow labor-market rebound.
• The metric rose above 30 for the first time since late May, suggesting markets could be in for a second bout of sharp price swings.
• The Fed announced Wednesday it would continue to hold rates near zero, and that policymakers expect such levels to remain through 2022.
• Chairman Jerome Powell added in a press conference that May's positive jobs report doesn't mean the US is out of the woods, and "it's a long road" to robust economic recovery.
• Watch VIX update live here.

Wall Street's go-to volatility gauge leaped as much as 12.7% early Thursday in the wake of Federal Reserve chair Jerome Powell's warning of a lengthy economic recovery.

Cboe's VIX index breached 30 for the first time since late May, forecasting a wild trading session after weeks of relative calm. The metric measures S&P 500 volatility through options contracts, and is commonly referred to as the market's "fear gauge."

The index's strong swing higher arrives after the Federal Reserve announced Wednesday its benchmark interest rate will remain near zero. Policymakers at the central bank forecast historically low rates lasting through 2022 to facilitate a robust economic recovery, according to a press release.

Chairman Jerome Powell also warned of a lengthy recovery period for the US labor market. May's positive jobs report is merely one sign of the economy healing, and "it's a long road" before unemployment returns to optimal levels, he said in a press conference.

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Early trading of stock index futures is mirroring the VIX's unexpected surge. Contracts for the Dow Jones industrial average plummeted as much as 900 points as investors grow increasingly worried about a second wave of COVID cases.

The weekslong decline in frothy market activity drove hordes of investors back to risk assets as prices slowly recovered from March lows. The VIX peaked at a record-high 83 on March 16 before posting a turbulent decline over the following months. While the metric has held steady near 30 since the mid-May, it remains up 110% from its pre-pandemic levels.

Even the VIX's own moves have grown more chaotic in recent sessions. An index that tracks VIX volatility jumped as much as 8.1% Thursday, notching a three-day upward streak.

The VIX index sat at 31.15 as of 8:05 a.m. ET Thursday.

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