The ProShares Ultra VIX Short-Term Futures ETF (UVXY) plummeted 6.97% on Thursday during the trading session, as investor anxiety surged following the Federal Reserve's hawkish policy stance.

In its December meeting, the Fed raised interest rates by 0.25% as expected but signaled fewer potential rate cuts in 2025 than markets had anticipated. This triggered a sell-off across equity markets, with the Dow Jones Industrial Average shedding 2.6%, the S&P 500 dropping 2.9%, and the tech-heavy Nasdaq 100 plunging 3.6%.

The heightened market volatility was reflected in the CBOE Volatility Index (VIX) spiking 58% to 25, its highest level since September 2022. As an ETF designed to track the short-term VIX futures contracts, UVXY was directly impacted by the surge in market turbulence following the Fed's hawkish messaging.