Fri. 11:27 a.m.: Stocks sink on new COVID variant; Dow Jones loses 890 points
NEW YORK (AP) — Stocks fell sharply today as a new highly transmissible coronavirus variant from South Africa appeared to be spreading across the globe, threatening months of progress at getting the pandemic under control.
Health officials in Europe and the U.K. moved quickly to propose suspending air travel from southern Africa. Meanwhile cases of the variant were found in Hong Kong, Belgium and Tel Aviv as well as major South African cities like Johannesburg.
The Dow Jones Industrial Average dropped more than 890 points after an hour of trading to 34,917. The S&P 500 index was down 1.9 percent, on pace for its worst day since late September. The Nasdaq Composite was down 1.7 percent.
There have been other variants of the coronavirus before — the delta variant devastated much of the US throughout the summer — but early data on this variant appears to show it’s more easily transmissible than other variants.
“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 U.S. Treasury note fell to 1.51 percent from 1.64 percent on Wednesday. The bond market was closed Thursday in the U.S. for Thanksgiving.
The economic impacts of this variants were 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 Delta Air Lines, United Airlines and American Airlines falling roughly 9 percent each.
Oil prices also fell sharply, plunging nearly 8 percent.
Investors, fearful of more lockdowns and travel bans, moved money into companies that largely benefited from previous waves, like Zoom Communications for meetings or Peloton for at-home exercise equipment. Peloton shares were up 3 percent while Zoom was up more than 8 percent.
Shares in the coronavirus vaccine manufacturers were among the biggest gainers as well. Pfizer shares rose nearly 7 percent while Modern shares jumped more than 22 percent.
Merck shares were down 5 percent, 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 in the data.
Stock trading the today after Thanksgiving is typically the slowest day of the year, with the market closing at 1 p.m. Eastern. The light trading could exacerbate any of today’s losses with fewer buyers and sellers.