The CBOE Volatility Index VIX, also known on Wall Street as the "Fear Gauge" spiked to a 10-month high Friday, as stocks tumbled in response to news about the spread of a new Covid variant.
The VIX is calculated from the prices of S&P 500 index options with near-term expiration dates. So it offers a 30-day projection of volatility. The VIX generally goes up when stock prices go down.
The VIX closed up 54.04% at 29.62 in a holiday-shortened session Friday. The index closed Wednesday at 18.58. The VIX, created in in 1993, recently has been trading below its historic average of 19.5.
As for Covid, The World Health Organization is holding an emergency meeting Friday following the discovery of the variant, known as B.1.1.529, in a traveler visiting Israel from South Africa earlier this week. It has also been identified in Hong Kong, according to U.K. health officials.
The variant carries a spike protein —the basis for infection -- that is vastly different from that which current vaccines are designed to neutralize, health authorities have said, and is mutating fast. Britain has restricted travel from South Africa, and several neighboring countries as a result, with the European Union following shortly after.
Meanwhile, retail stocks got hammered Friday, as Black Friday sales weren't enough for investors to overcome concerns about the new variant of Covid-19 that has markets spooked Friday.
Shares of Macy's (M) - Get Macy's Inc Report dropped 5.16%, while Nordstrom (JWN) - Get Nordstrom, Inc. Report fell 1.10%, Gap (GPS) - Get Gap, Inc. Report declined 2/86%, and TJX Cos. (TJX) - Get TJX Companies Inc Report fell 2.97%.
Big box retailers fared slightly better, with Target (TGT) - Get Target Corporation Report stock declining 0.88%, Walmart (WMT) - Get Walmart Inc. Report falling 1.12% and Costco (COST) - Get Costco Wholesale Corporation Report down 0.65%.