Stocks sink on new COVID variant; Dow loses 905 points
NEW YORK — 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 percent, 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 percent, 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 percent while Chevron fell 2.3 percent.
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 percent, 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 percent from 1.64 percent on Wednesday. As a result, banks took some of the heaviest losses. JPMorgan Chase dropped 3 percent.
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 were already being felt. The European Union and the U.K. both announced travel restrictions from southern Africa on Friday. After the market closed, the U.S. also put travel restrictions on those coming from South Africa as well as seven other African nations.
Airline stocks quickly sold off, with United Airlines dropping 9.6 percent and American Airlines falling 8.8 percent.
“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 percent to $54,179, according to CoinDesk.
In Nantucket, Massachusetts, where he is spending a holiday weekend, President Joe Biden said he wasn’t concerned about the market’s decline.
“They always do when there’s something on COVID (that) arises,” Biden said.