Wal-Mart (WMT), Coca-Cola Co (KO) Limit Dow Damage

The Dow Jones industrial average .DJI dropped 169.38 points, or 1.39 percent, to end Tuesday at 12,056.96. If not for Wal-Mart (NYSE:WMT) and Coca-Cola (NYSE:KO) closing in postive territory, the damage would have been much worse.

Concerns that rising oil prices could hurt economic recovery prompted investors on Tuesday to sell stocks and hedge against further declines.

The CBOE Volatility Index VIX .VIX, Wall Street's so-called fear gauge, jumped 13.1 percent to 20.75 on growing uncertainty about oil. The index measures the cost of using options as insurance against a decline in the S&P 500 .SPX index.

"We've been seeing how quickly the VIX can spike up, and there is no reason to believe that it won't double from where it is now," said Harry Rady, CEO of Rady Asset Management in San Diego, California.

Brent crude rose above $115 a barrel as supply disruptions persist and political violence spreads in the Middle East and North Africa. Higher oil translates into increased energy and gasoline costs for consumers.




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VIX to Range From 16 and Low 20s Says Goldman (NYSE:GS)

Commenting on the VIX, Goldman Sachs (NYSE:GS) said they see it operating in a range from 16 to the low 20s for 2011.

The reasoning behind the performance of the VIX, which is the benchmark index for U.S. stock options, is the assumption equities will continue to rise, producing a resultant reduction in volatility.

Goldman Sachs said, “As growth rebounds and manufacturing data improve, equity typically rallies and equity volatility declines. The combination of stronger growth, moderate inflation and accommodative monetary policy should be a beneficial environment for risky assets and lower realized volatility.”

Stocks in the U.S. have risen for six weeks in a row.