U.S. stocks suffered some of the biggest one-day declines of the year on Friday as a new, fast-spreading variant of COVID-19 discovered in South Africa sparked new fears that a resurgent coronavirus could thwart the global economy’s recovery from the pandemic .
The Dow Jones Industrial Average – after briefly falling more than 1,000 points – ended the day down 905 points, or 2.5%, for its worst decline of the year, while the S&P 500, 2.27%, its worst day lost since February. The Nasdaq Composite fell 2.23% in Friday’s shortened trading session (US markets close at 1 p.m. ET on the Thanksgiving holiday).
The decline comes after health officials warned of a new variant found in South Africa that has a high number of mutations and has spread rapidly among young people. The World Health Organization will meet on Friday to discuss whether the tribe is of concern and whether to name it according to the Greek alphabet.
“The new variant news introduced a sell and ask-later mentality,” said Ryan Detrick, chief marketing strategist at LPL Financial.
|Me: DJI||DOW JONES AVERAGE VALUES||34899.34||-905.04||-2.53%|
|Me: COMP||NASDAQ COMPOSITE INDEX||15491.656804||-353.57||-2.23%|
The economic impact of the new tribe – spotted in Hong Kong, Belgium and Israel, as well as South Africa – was felt as early as Friday when at least 10 European nations suspended air travel from southern Africa. the 27-nation European Union also recommended an “emergency brake” for travel from southern Africa, citing the “very worrying” new variant.
The airline stocks sold out quickly, with Delta Air Lines, United Airlines, and American Airlines each falling nearly 9%.
|FROM||DELTA AIR LINES, INC.||36.38||-3.31||-8.34%|
|UAL||UNITED AIRLINES HOLDINGS, INC.||42.26||-4.47||-9.57%|
|EEL||AMERICAN AIRLINES GROUP, INC.||17.75||-1.71||-8.79%|
“The economic recovery has been pretty impressive, and the only thing that could completely knock it down is something more dangerous,” said Detrick. “Time will tell how concerned we should be, but investors are selling in the face of potential bad news.”
Some European countries have already tightened antivirus controls this week after their own case numbers skyrocketed. Austria imposed a 10-day lockdown, while Italy restricted the activity of unvaccinated people. Americans have been advised by their government to avoid Germany and Denmark.
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|USE||UNITED STATES OIL FUND LP||49.63||-6.25||-11.18%|
Oil prices also fell sharply, falling nearly 11% to around $ 69.93 a barrel, the worst day since April 2020. International benchmark Brent Crude Oil Futures slipped 9.9%, or $ 8.37, to $ 73.85 a barrel on renewed fears of a further slowdown in the global economy.
Vaccine makers were the early winners of Friday’s sell-off, with Pfizer, Moderna and BioNTech shares all up. Johnson & Johnson was down. While it was not immediately clear how effective the vaccines against the new variant were, mRNA vaccines – such as those developed by Pfizer and Moderna – can be easily updated.
Pfizer was well on its way to closing at an all-time high based on data from January 1972, while Moderna was poised for the biggest percentage increase since March 2020.
|PFE||PFIZER INC.||54.00||+3.11||+ 6.11%|
|BNTX||BIONTECH SE||348.00||+43.24||+ 14.19%|
|MRNA||MODERNA, INC.||329.63||+56.24||+ 20.57%|
|JNJ||JOHNSON & JOHNSON||159.20||-1.04||-0.65%|
Investors – concerned about renewed business restrictions and travel bans – shifted money into stay-at-home stocks that have benefited from lockdown measures throughout the pandemic, such as Zoom Communications for home office meetings and Peloton for home exercise equipment.
One sign that investors have become more and more nervous is the Cboe Volatility Index, known as Wall Street’s “fear indicator,” rising nearly 45% to 26.92, its highest level in months.
|ZM||ZOOM VIDEO COMMUNICATIONS, INC.||220.21||+11.91||+ 5.72%|
|PTON||PELOTON INTERACTIVE, INC.||46.41||+2.49||+ 5.67%|