U.S. stocks ended down Friday, as investors retreated from risk around the world amid concerns over the impact of a dangerous new variant of the virus that causes Covid-19.
The World Health Organization held an emergency meeting Friday following the discovery of the variant, known as B.1.1.529, in a traveler visiting Israel from South Africa earlier this week.
It has also been identified in Hong Kong, according to U.K. health officials.
“WHO is closely monitoring the recently reported variant B.1.1.529. So far under 100 sequences have been reported,” the agency said in a statement. “Early analysis shows that this variant has a large number of mutations that require and will undergo further study.”
The variant carries a spike protein — the basis for infection — that is vastly different to that which current vaccines are designed to neutralize, health authorities have said, and is mutating fast.
Britain has restricted travel from South Africa, and several neighboring countries as a result, with the European Union following shortly after.
Market reaction to the variant’s potential was swift and decisive: European stocks felt the biggest single-day decline of the year, with the Stoxx 600 benchmark finishing at 3.7% in Frankfurt, while oil prices tumbled and benchmark Treasury bond yields fell 15 basis points to 1.48%.
The Dow Jones Industrial Average fell by more than 900 points, or 2.5%, to end at 34,899, the biggest slide since mid-July.
The S&P 500 closed 2.3% lower. The tech-focused Nasdaq Composite index fell 2.2 percent.
U.S. markets closed at 1 p.m. Eastern time.
Pfizer (PFE) – Get Pfizer Inc. Report shares were a rare gainer as investors piled into the drugmaker following confirmation of the new Covid-19 variant and news that European officials have approved its Comirnaty vaccine for use in young children, while Moderna (MRNA) – Get Moderna, Inc. Report closed at 20.57% to $329.63 each.
Merck & Co. (MRK) – Get Merck & Co., Inc. (MRK) Report shares, however, closed down 3.78% after the drugmaker published data from a large-scale trial of its Covid-19 pill treatment that showed a lower-than-expected efficacy rate against hospitalization and death in high-risk patients.
Peloton Interactive (PTON) – Get Peloton Interactive, Inc. Class A Report shares closed 5.67% higher than in pre-market trading and led advances for so-called stay-at-home stocks as investors hedge the impact of the new Covid-19 variant.
Investors bet on a slower return to full-time office work while also seizing on the opportunity to snap-up a stock that has lost more than a quarter of its value over the past month.
Other notable stay-at-home movers were Teladoc Health (TDOC) – Get Teladoc Health, Inc. Report, which was marked 10% higher before closing at 3.41%, and Netflix (NFLX) – Get Netflix, Inc. (NFLX) Report closed 1.12% higher.
Airline and travel stocks were notably lower in pre-market trading, with domestic carriers slumping alongside their European rivals amid fears of new travel restrictions following the discovery of a potentially vaccine-resistant Covid variant.
Delta Air Lines (DAL) – Get Delta Air Lines, Inc. Report closed at 8.32% lower, while American Airlines (AAL) – Get American Airlines Group, Inc. Report slumped 8% and United Airlines (UAL) – Get United Airlines Holdings, Inc. Report was marked 8.79% lower at bell. Planemaker Boeing (BA) – Get Boeing Company Report fell 5.39% to $199.21 each while cruise operator Carnival Corp. (CCL) – Get Carnival Corporation Report slumped at 10.94% at bell.
In other markets, oil prices tumbled from multi-year highs on concerns that energy demand — particularly in jet fuel — could quickly decelerate if lockdowns and travel restrictions intensify from a worldwide spread of the news variant.
WTI futures for January delivery fell more than 13% at $68.04 per barrel while WTI contracts for the same month, the global pricing benchmark, fell $4.88 to $77.34 per barrel.
In overseas markets, the region-wide MSCI ex-Japan index closed at -3.3%, while the Nikkei 225 in Tokyo tumbled 2.53% to close at 28,751.62 points.