1.05 pm: Dow drops nearly 1,000 points in biggest one-day decline this year
US stocks fell sharply in a holiday-shortened session as investors and traders were spooked by a World Health Organization (WHO) warning that a new coronavirus (COVID-19) variant has been detected in South Africa that may be more resistant to vaccines.
At the close, the Dow dropped 905 points, or 2.5%, to 34,899, while the S&P 500 eased 107 points at 4,595 and the tech-heavy Nasdaq slipped 354 points to 15,492.
“It’s important to stress that very little is known at this point about this latest strain, including whether it can evade vaccines or how severe it is relative to other mutations. Therefore, it’s hard to make any informed investment decisions at this point,” Bespoke Investment Group’s Paul Hickey said.
“Historically speaking, chasing a rally or selling into a sharp decline (especially on a very illiquid trading day) rarely ends up being profitable, but that isn’t stopping a lot of people this morning,” Hickey added.
Travel and oil stocks were amongst the hardest hit, on fears of further lockdowns, while stay-at-home names such as Zoom Video Communications Inc (NASDAQ:ZM) climbed more than 6%.
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10am: US stocks plunge at the open
US stocks plunged at the open in New York in what will be a truncated session as global equity markets were sent into a tailspin over the new coronavirus (COVID-19) variant discovered in South Africa.
The Dow Jones Industrial Average dropped over 777 points, or 2.17%, at 35,026.
The broader-based S&P 500 shed almost 80 points, or 1.71%, at 4,621. The tech-laden Nasdaq exchange dropped over 220 points, or 1.37% at 15,626.
The new strain has many mutations, say scientists, and is thought to be far more transmissable and may be resistant to vaccines, fueling huge fears about how it will impact economies' recoveries.
The oil price fell as did global equity markets, with travel stocks, unsurprisingy, the biggest laggards.
6.30am: US stocks seen opening down
US stocks are expected to start lower as the market reopens from the Thanksgiving holiday to news of a rapidly-spreading new strain of coronavirus (COVID-19) that may result in tougher global responses.
Futures for the Dow Jones Industrial Average declined 2.12% in Friday pre-market trading, while the broader S&P 500 index shed 1.62% and those for the tech-heavy Nasdaq 100 fell 0.9%.
US stocks ended mixed on Wednesday ahead of the holiday. The S&P closed 0.23% up at 4,701 and the Nasdaq finished at 15,845, a 0.44% gain. But the Dow Jones lost 0.03% to finish at 35,804 points.
“We now have a new Covid variant that’s ‘very’ different from the ones we knew so far, a rising inflation, and a market bubble,” commented Ipek Ozkardeskaya, senior analyst at Swissquote.
“So inevitably, the market mood is souring, as investors don’t know whether the equities could survive to another economic hit with less support from the central banks, as central banks would have to deal with a dual fight that’s intensifying on both fronts: inflation is rising, and Covid news are getting worrisome.
“The only encouraging news is the easing oil prices, which could tame the inflationary pressures and give more time to the central banks before pulling back support."