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Dow plunges by 1,000 points in worst drop of 2021 as new COVID-19 variant triggers market sell-off

U.S. stocks dropped sharply on Friday as a new, fast-spreading COVID-19 variant detected in South Africa triggered fresh fears that a resurgent coronavirus could scuttle the global economy’s recovery from the pandemic. 

The Dow Jones Industrial Average fell more than 1,000 points while the S&P 500 dropped 1.9%, on track for its worst day since September. The Nasdaq Composite fell 1.7% at the beginning of the shortened trading session on Friday (U.S. markets close at 1 p.m. ET due to the Thanksgiving holiday.) 

The drop comes after health officials warned of a new variant found in South Africa that has a high number of mutations and has spread quickly among young people. The World Health Organization is due to meet Friday to discuss whether the strain is a concern and to determine whether to give it a name from the Greek alphabet. 

“The new variant news has brought with it a sell first and ask questions later mentality,” said Ryan Detrick, chief market strategist for LPL Financial.
 

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 34797.78 -1,006.60 -2.81%
SP500 S&P 500 4592.89 -108.57 -2.31%
I:COMP NASDAQ COMPOSITE INDEX 15502.171259 -343.05 -2.17%

The economic impacts of the new strain – which has been found in Hong Kong, Belgium and Israel, as well as South Africa – were already being felt on Friday, with at least 10 European nations suspending air travel from southern Africa. The 27-nation European Union also recommended an “emergency brake” on travel from southern Africa, citing the “very concerning” new variant.

Airline stocks quickly sold off, with Delta Air Lines, United Airlines and American Airlines falling nearly 9% each. 

Ticker Security Last Change Change %
DAL DELTA AIR LINES, INC. 34.82 -4.87 -12.27%
UAL UNITED AIRLINES HOLDINGS, INC. 40.56 -6.17 -13.19%
AAL AMERICAN AIRLINES GROUP, INC. 17.12 -2.34 -12.02%

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

Some European countries already tightened anti-virus controls this week after their own case numbers spiked. Austria imposed a 10-day lockdown, while Italy restricted activity by unvaccinated people. Americans were advised by their government to avoid Germany and Denmark.

BEST PLACES TO SHOP BLACK FRIDAY

Ticker Security Last Change Change %
USO UNITED STATES OIL FUND L.P. 49.02 -6.86 -12.28%

Oil prices also fell sharply, plunging nearly 11% to about $69.93 per barrel, its worst day since April 2020. International benchmark Brent crude futures slid 9.9%, or $8.37, to $73.85 per barrel following reports that OPEC is considering pausing an output increase after President Biden and other energy-consuming countries tapped their national petroleum reserves.

The Cboe Volatility Index – known as Wall Street’s “fear gauge” – rose to more than 45% to 27, its highest level in months. 

Vaccine-makers were the early winners in Friday’s sell-off, with shares of Pfizer, Moderna and BioNTech all up. Johnson & Johnson was down. While it was not immediately clear how effective the vaccines were against the new variant, mRNA vaccines – such as those developed by Pfizer and Moderna – can be easily updated. 

Pfizer was on pace to close at an all-time high, based on data dating back to January 1972, while Moderna was poised for the largest percent increase since March 2020. 

Ticker Security Last Change Change %
PFE PFIZER INC. 53.65 +2.74 +5.38%
BNTX BIONTECH SE 350.97 +46.21 +15.16%
MRNA MODERNA, INC. 335.46 +62.08 +22.71%
JNJ JOHNSON & JOHNSON 159.78 -0.54 -0.34%

Travel stocks, hotels, cruise lines and airlines will likely see pressure on rising lockdown fears. 

Ticker Security Last Change Change %
DAL DELTA AIR LINES, INC. 34.70 -5.00 -12.59%
AAL AMERICAN AIRLINES GROUP, INC. 17.07 -2.40 -12.31%
LUV SOUTHWEST AIRLINES CO. 44.62 -2.37 -5.04%
RCL ROYAL CARIBBEAN GROUP 68.47 -9.85 -12.58%
MAR MARRIOTT INTERNATIONAL, INC. 144.00 -13.61 -8.64%
HLT HILTON WORLDWIDE HOLDINGS, INC. 134.24 -11.02 -7.58%

Additionally, stay-at-home stocks, including Zoom, Peloton, and Netflix, may also see some positive action. 

Ticker Security Last Change Change %
ZM ZOOM VIDEO COMMUNICATIONS, INC. 228.76 +20.46 +9.82%
PTON PELOTON INTERACTIVE, INC. 45.84 +1.92 +4.37%
NFLX NETFLIX, INC. 668.27 +9.98 +1.52%

And with Black Friday underway investors will also keep a close eye on retail stocks as early sales data rolls in. As of Thursday online spending was on pace to hit $5.4B as tracked by Abode.

Through Wednesday, consumers racked up over $72 billion from Nov. 1-23 a nearly 20% jump from the same period a year ago. 

In Asia, the Shanghai Composite Index lost 0.6% to 3,564.09 and the Nikkei 225 in Tokyo declined to 28,751.62. The Hang Seng in Hong Kong tumbled 2.7% to 24,080.52.

The Kospi in Seoul lost 1.5% to 2,936.44 and Sydney’s S&P-ASX 200 fell 1.7% to 7,279.30.

The Associated Press contributed to this report. 

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