Fears over new Omicron coronavirus variant send Wall Street stocks tumbling

Stocks closed sharply lower on Wall Street on Friday, after the new Omicron coronavirus variant detected in South Africa appeared to be spreading across the globe and the European Union proposed suspending air travel from southern Africa. The Dow Jones Industrial Average lost 905 points. The S&P 500 index fell 2.3 per cent, its worst day since February and the Nasdaq composite had its worst drop in two months. Travel and energy stocks are among the biggest losers, with Royal Caribbean, Carnival and Norwegian Cruises all off over 10 per cent. Stock trading the Friday after Thanksgiving is typically the slowest day of the year, with the market closing at early at 1pm. “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 1.51 per cent from 1.64 per cent on Wednesday. As a result, banks took some of the heaviest losses. JPMorgan Chase dropped 4 per cent. There have been other variants of the coronavirus – the Delta variant devastated much of the US throughout the summer – and investors, public officials and the general public are jittery about any new variant that is spreading. It has been nearly two years since Covid-19 emerged, killing more than 5 million people around the globe so far. Health officials in Europe and the UK 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. WHO designates coronavirus variant found in South Africa as ‘of concern’ The economic impact of this variant is 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 more than 10 per cent each. A sign of how fearful Wall Street has become was the VIX, the market’s measurement of volatility that is sometimes referred to as the market’s “fear gauge”. The VIX jumped 49 per cent to a reading of 27.75, 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. Peloton shares were up 4 per cent while Zoom was up roughly 9 per cent. Shares in the coronavirus vaccine manufacturers were among the biggest gainers as well. Pfizer shares rose nearly 5 per cent while Moderna shares jumped 23 per cent. Merck shares were down 4 per cent, however. While US 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. 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, localised 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 labour shortages worse.’’ Former heads of pandemic review panel warn ‘the world is losing time’ The variant also puts more pressure on central banks, who already faced with a tough 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.

Fears over new Omicron coronavirus variant send Wall Street stocks tumbling

The Dow lost 905 points, the S&P 500 fell 2.3 per cent – its worst day since February – and the Nasdaq had its worst drop in two months Travel and energy stocks were among the biggest losers, amid concern over more lockdowns and travel bans

The Dow lost 905 points, the S&P 500 fell 2.3 per cent – its worst day since February – and the Nasdaq had its worst drop in two months

Travel and energy stocks were among the biggest losers, amid concern over more lockdowns and travel bans