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US stocks fell on Friday renewed Covid fears about a new variant found in South Africa.
The Dow Jones Industrial Average lost 800 points, or more than 2%, while the S&P 500 and Nasdaq Composite were down 1.4% and 0.9%, respectively. Friday is a shortened trading day due to the Thanksgiving holiday as U.S. markets close at 1:00 p.m. ET.
The downward movement came after WHO officials on Thursday before a new Covid-19 variant discovered in South Africa. The new variant contains more mutations in the spike protein, the cell-binding component of the virus, than the highly contagious Delta variant. Because of these mutations, scientists fear that vaccine resistance may be increased, although WHO said more research is needed.
the Britain has temporarily suspended flights from six African countries due to the variant. Israel banned travel to multiple countries after reporting a case to a traveler. Two cases have been identified in Hong Kong. Belgium also confirmed a case.
“When I read that there is one [case] in Belgium and one in Botswana, we’ll wake up next week and find one in this country. And I am not going to recommend anyone buy anything today until we are sure it isn’t going to happen and I can’t be sure that it doesn’t, “said CNBC’s Jim Cramer.
Bond prices rose and yields fell in the midst of a flight to safety. The return on the benchmark 10-year US Treasury bond decreased by 13 basis points to 1.511% (1 basis point corresponds to 0.01%). This was a sharp reversal as yields jumped above 1.68% at times earlier in the week. Bond yields move in the opposite direction to prices.
Oil prices also fell US crude oil futures declined 6.2% to $ 73.57 a barrel, while the South African rand fell 1.7% against the greenback to 16.231 a barrel.
Often referred to as Wall Street’s “fear measure,” the Cboe volatility index rose to 28, its highest level in two months.
Travel-related stocks were hit the hardest as Carnival Corp. and Royal Caribbean both lost more than 10% in pre-opening trading. United Airlines, Delta Air Lines, and American Airlines each fell more than 7%. Boeing lost 6%. Marriott International and Hilton Worldwide were down more than 5%.
Bank stocks fell on fears of a slowdown in economic activity and falling interest rates. Bank of America, Goldman Sachs and Citigroup each lost more than 4%.
Industrials associated with the global economy, led by Caterpillar, fell 3%. Dow Inc. lost 2%.
Chevron lost nearly 5% as energy stocks reacted to the surge in crude oil prices.
On the other hand, investors pushed their way into vaccine manufacturers. The Moderna share gained more than 8%. Pfizer shares were up 5%.
Some of the home games that had risen in the first few months of the pandemic were higher again. Zoom-Video added 9%. Netflix was up 2%.
“It’s important to emphasize that very little is known about this newest strain at this point, including whether it can bypass vaccines or how severe it is compared to other mutations. Therefore, it is difficult to make informed investment decisions at this point. ”Paul Hickey of the Investment Group said in a statement to clients. “Historically, chasing a rally or selling into a sharp decline (especially on a very illiquid trading day) is rarely profitable, but that doesn’t stop a lot of people this morning.”
Several investment professionals told CNBC on Friday that the sell-off could be a buying opportunity.
“Friday is the day after Thanksgiving, probably not that many traders on their desks with an early close today. Therefore, potentially lower liquidity is causing part of the withdrawal, “said Ajene Oden of BNY Mellon Investor Solutions on CNBC’s”Squawk box. ”“ But the reaction we’re seeing is an investor buying opportunity. We have to think long-term. “
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Markets closed for Thanksgiving Thursday, so stocks posted modest gains on Wednesday that dampened the week’s losses for the S&P 500 and Nasdaq Composite. During the holiday weeks, the trading volume tends to be low.
A surge in Treasury yields earlier this week put high-growth stocks under pressure. The Nasdaq is down 1.3% for the week, while the S&P 500 is up less than 0.1% and the Dow is up about 0.6%.
The last few weeks of the year are typically a busy time for the market, with the so-called Santa Claus rally usually bringing happy holidays for Wall Street. The S&P 500 is up 25% since the start of the year.
Friday also marks the unofficial start of the Christmas shopping season as investors look to Black Friday insights to set US consumer sentiment.
Retail executives have been speaking for the past few weeks about how to deal with supply chain issues and inflation. It also remains to be seen whether the discussion of supply chain issues caused consumers to start their Christmas shopping earlier, potentially hurting fourth-quarter sales.
“I wouldn’t be surprised if that was a dynamic around the holiday season,” said Sarah Henry, portfolio manager at Logan Capital Management. She added that her firm was looking for companies with long-term strategic advantages rather than trying to bet on the best Christmas sales results.
There were also several strong economic reports on Wednesday, with personal income and consumer spending higher than expected for October and Initial jobless claims at their lowest level since 1969. Core PCE, the Fed’s preferred inflation meter, remained higher at 4.1%.
No major business news is planned for Friday.