Dow tanks 900 points on COVID concerns, worst one-day drop of the year

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The Dow Jones Industrial Average tanked more than 900 points Friday in a holiday-shortened trading day after the discovery of a new variant of COVID-19 in South Africa jilted investors around the world.

The Dow fell as much as 1,000 points at one point, but finished the day down some 905 points, or 2.5 percent, for its worst day of the year.

The S&P 500 and Nasdaq plummeted 2.3 percent and 2.2 percent, respectively.

The massive sell-off saw investors abandon bets on the global economic recovery and pile into the basket of stocks that surged during the depths of the pandemic.

Stocks linked to global travel like airlines, cruise lines and hotels were hit particularly hard while so-called stay-at-home stocks like Peloton and Zoom surged. Pharmaceuticals tied to drugs for treating COVID-19 traded higher, as well.

Wall Street was in a frenzy on Black Friday as stocks around the world tumbled in the face of a new Covid-19 variant. John Angelillo/UPI/Shutterstock

Ryan Detrick, chief market strategist for LPL Financial, said the market is in a “sell first and ask questions later mentality.”

“The economic recovery has been quite impressive and the one thing that could knock it over completely would be a more dangerous variant. Time will tell how worried we should be, but investors are selling in front of potential bad news,” he added.

The US sell-off comes after markets in Europe and Asia saw similar drops as investors around the world were jilted by warnings coming out of Africa about a new, potentially more infectious variant of COVID-19 that could be resistant to vaccines. Hong Kong’s Hang Seng index fell more than 2 percent in Friday trading and Europe’s STOXX 600 index closed 3.7 percent lower, its worst one-day drop in about a year.

Oil prices tumbled, too, with US crude futures almost 12 percent to $69.00 per barrel, while Brent crude futures dropped by more than $8.50, or 10.5 percent, to $73.50 a barrel.

Dow tanks 1,000 points as new COVID variant in South Africa stokes concerns.

The nosedives in global equities come as officials at the World Health Organization said they would hold a special meeting Friday to discuss the variant, which has been stoking concern among scientists who fear it may be more resistant to current vaccines.

Jeff Carbone, managing partner for Cornerstone Wealth, said the market reaction to the new variant could also be a sign that the market was overheated to begin with.

He said the sell-off is “maybe a needed pause in this growth market to reset and get ready for year end.”

The new variant has been found mostly to be present in South Africa, along with Botswana, Hong Kong and, most recently, Israel. Officials in Belgium announced Friday morning that they’ve identified two cases that they suspect to be the new variant, as well.

The S&P 500 index fell 2.3%, its worst day since September and the Nasdaq composite also had its worst drop in two months. AP

The United Kingdom on Thursday suspended all flights from six African countries due to the variant. Israel also imposed “no-travel” restrictions on the majority of Africa and France also suspended flights from Southern Africa Friday morning.

In a press conference Friday morning, Israeli Prime Minister Naftali Bennett called the new variant “very worrying.” But much remains unknown about the variant, with much of the concern focusing on its unusual combination of mutations.

Dr. Anthony Fauci, the White House’s chief medical adviser, said Friday in an interview with CNN that there’s no evidence that the new variant has yet appeared in the US.

Without clarity on the severity of the threat posed by the new variant, investors abandoned travel stocks that have rallied amid the global recovery from the pandemic and instead piled into so-called work-from-home stocks like Peloton and Zoom, which were last seen trading 6.5 percent and 9.3 percent higher, respectively.

People queue to get vaccinated at a shopping mall in Johannesburg, South Africa. The U.K. has suspended flights to six African countries, including South Africa. AP

Sectors closely tied to the reopening of global travel were hit hard, with airlines down about 7 percent, on average, cruises between 8 and 10 percent lower and hotels falling about 8 percent.

Stocks and oil plunge as new Covid variant fears slam global markets

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Hong Kong/London (CNN Business) Stocks fell and oil prices plunged more than 10% on Friday as the emergence of a new Covid-19 variant rattled global markets.

Hang Seng Index HSI Nikkei 225 N225 CAC40 CAC40 DAX DAX Asian markets led the way, with Hong Kong’sdropping 2.7%, while Japan’swas down 2.5%. European markets also sold off heavily, with major indexes including the FTSE100 , France’sand Germany’sfalling between 3% and 4%.

Dow INDU S&P 500 INX Nasdaq COMP US markets, which were closed Thursday for Thanksgiving, were also slammed during Friday’s shortened trading session.futures fell more than 900 points, or about 2.5%. Theandwere down nearly 2%.

US oil futures sank by more than 11% to trade below $70 a barrel. Brent crude, the global oil benchmark, suffered a similar drop to around $73.

South Africa’s health minister said Thursday that a new coronavirus variant appears to be spreading rapidly in parts of the country. It has also been detected in Botswana, Hong Kong, Israel and Belgium.

Stocks sink on new COVID variant; Dow loses 905 points

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NEW YORK (AP) — Stocks sank Friday, with the Dow Jones Industrial Average briefly falling more than 1,000 points, as a new coronavirus variant first detected in South Africa appeared to be spreading across the globe. Investors were uncertain whether the variant could potentially reverse months of progress at getting the COVID-19 pandemic under control.

The S&P 500 index dropped 106.84 points, or 2.3%, to close at 4,594.62. It was the worst day for Wall Street’s benchmark index since February.

The index was dragged lower by everything from banks, travel companies and energy companies as investors tried to reposition to protect themselves financially from the new variant. The World Health Organization called the variant “highly transmissible.”

The price of oil fell about 13%, the biggest decline since early in the pandemic, amid worries of another slowdown in the global economy. That in turn dragged down energy stocks. Exxon shares fell 3.5% while Chevron fell 2.3%.

The blue chips closed down 905.04 points to end the day at 34,899.34. The Nasdaq Composite lost 353.57 points, or 2.2%, to 15,491.66.

“Investors are likely to shoot first and ask questions later until more is known,” Jeffrey Halley of Oanda said in a report. That was evident from the action in the bond market, where the yield on the 10-year Treasury note fell to 1.48% from 1.64% on Wednesday. As a result, banks took some of the heaviest losses. JPMorgan Chase dropped 3%.

There have been other variants of the coronavirus — the delta variant devastated much of the U.S. throughout the summer — and investors, public officials and the general public are jittery about any new variant that’s spreading. It’s been nearly two years since COVID-19 emerged, killing more than 5 million people around the globe so far.

Cases of the new variant were found in Hong Kong, Belgium and Tel Aviv as well as major South African cities like Johannesburg.

The economic impacts of this variant are already being felt. Flights between South Africa and Europe were being subject to quarantine or being shut down altogether. Airline stocks were quickly sold off, with United Airlines dropping 9.6% and American Airlines falling 8.8%..

“COVID had seemingly been put in the rear-view mirror by financial markets until recently," Douglas Porter, chief economist at BMO Capital Markets. “At the least, (the virus) is likely to continue throwing sand in the gears of the global economy in 2022, restraining the recovery (and) keeping kinks in the supply chain.”

Even Bitcoin got caught up in the selling. The digital currency dropped 8.4% to $54,179, according to CoinDesk.

One sign of Wall Street’s anxiety was the VIX, the market’s measurement of volatility that is sometimes referred to as its “fear gauge.” The VIX jumped 53.6% to a reading of 28.54, its highest reading since January before the vaccines began to be widely distributed.

Fearful of more lockdowns and travel bans, investors moved money into companies that largely benefited from previous waves, like Zoom Communications for meetings or Peloton for at-home exercise equipment. Shares in both companies rose nearly 6%.

The coronavirus vaccine manufacturers were among the biggest beneficiaries of the emergence of this new variant and the subsequent investor reaction. Pfizer shares rose more than 6% while Moderna shares jumped more than 20%.

Merck shares fell 3.8%, however. While U.S. health officials said Merck’s experimental treatment of COVID-19 was effective, data showed the pill was not as effective at keeping patients out of the hospital as originally thought.

Investors are worried that the supply chain issues that have impacted global markets for months will worsen. Ports and freight yards are vulnerable and could be shut by new, localized outbreaks.

“Supply chains are already stretched,’’ said Neil Shearing, an economist with Capital Economics in London. “A new, more dangerous, virus wave could cause some workers to temporarily exit the workforce, and deter others from returning, making current labor shortages worse.’’

The variant also puts more pressure on central banks that are already faced with a dilemma: whether and when to raise interest rates to combat rising inflation. “The threat of a new, more serious, variant of the virus may be a reason for central banks to postpone plans to raise interest rates until the picture becomes clearer,’’ Shearing said.

Stock trading the Friday after Thanksgiving is typically the slowest day of the year, with the market closing at 1 p.m. Eastern. However volume on Friday was much higher than it would typically be for a holiday-shortened day. Roughly 3.4 billion shares exchanged hands on the New York Stock Exchange, which is only modestly below the 4 billion shares traded on an average day.

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Wiseman reported from Washington.

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