Dow Futures Down 855 Pts as New Covid Strain Overshadows Black Friday

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Dow Futures Down 855 Pts as New Covid Strain Overshadows Black Friday
Credit: © Reuters.

By Peter Nurse   

Investing.com - U.S. stocks are seen opening aggressively lower Friday, in holiday-thinned volumes, as the discovery of a new potentially vaccine-resistant Covid variant raised fears of fresh harm to the global economy.

At 7 AM ET (1200 GMT), the Dow Futures contract was down 855 points, or 2.4%, S&P 500 Futures traded 90 points, or 1.9%, lower and Nasdaq 100 Futures slumped further, dropping 210 points, or 1.3%.

The selloff followed the news that the World Health Organisation was studying a new variant of the Covid-19 virus, which has been detected mainly in southern Africa. 

The United Nations agency has called an emergency meeting for Friday to discuss what this means for existing treatments, given that the new variant has a spike protein that has mutated to be very different from the one in the original coronavirus that the vaccines are based on.

The U.K. quickly responded to the news by temporarily suspending flights from six countries in southern Africa and quarantining travelers from those regions. This resulted in heavy losses for the airline and travel industry in European hours, and this negative sentiment is set to carry through to Wall Street.

American Airlines (NASDAQ: AAL ) stock fell over 6% premarket, with Delta (NYSE: DAL ) and United (NASDAQ: UAL ) following suit, while Carnival (NYSE: CUK ) stock dropped over 9%, as did Royal Caribbean (NYSE: RCL ) stock.

The banking sector also weakened, as Bank of America (NYSE: BAC ), Citigroup (NYSE: C ), JPMorgan Chase (NYSE: JPM ), Goldman Sachs (NYSE: GS ), Wells Fargo (NYSE: WFC ) and Morgan Stanley (NYSE: MS ) all fell more than 3% on the reduced likelihood of early interest rate hikes if the Federal Reserve is spooked by the new variant.   

Crude prices also slumped as the announcement of the new Covid-19 strain raised concerns about demand just as a U.S.-led coalition of major consumers is adding output to the global supply.

By 7 AM ET, U.S. crude futures traded 6.6% lower at $73.20 a barrel, while the Brent contract fell 5.9% to $77.39.

Exxon Mobil (NYSE: XOM ) stock fell 5.6% in response and Chevron (NYSE: CVX ) stock dropped 4.7%.

On the flip side, the likes of Zoom Video (NASDAQ: ZM ) and Peloton (NASDAQ: PTON ), two of the biggest winners of the pandemic, were trading higher in Friday’s premarket as the emergence of the new Covid variant raised fears that countries could bring back restrictions on movement of people.

Elsewhere, Didi (NYSE: DIDI ) stock will be in the spotlight after authorities in China asked the ride-hailing firm to delist from the NYSE because of security fears, while Tesla (NASDAQ: TSLA ) CEO Elon Musk sold more shares of the electric car manufacturer.

Investors will also be looking at the retail sector, after a volatile week, with Friday marking the unofficial start of the holiday shopping season. 

A number of retailers saw their stocks plunge this week, including Gap (NYSE: GPS ) and Nordstrom (NYSE: JWN ), after warning of inventory shortages and supply chain constraints in their third quarter earnings reports.

Additionally, gold futures rose 1.6% to $1,812.55/oz, while EUR/USD traded 0.7% higher at 1.1282.

 

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