US STOCKS-Wall Street drops on fears over new coronavirus strain

  • Reuters
US STOCKS-Wall Street drops on fears over new coronavirus strain

(For a live blog on the U.S. stock market, click LIVE/ or type LIVE/ in a news window.)

* Travel stocks drop on disruption fears

* Big banks jump after Fed's stress test results

* U.S. Congress set to vote on $900 bln relief bill

* Tesla slips from record high in its S&P 500 debut

* Indexes down: Dow 1.29%, S&P 1.86%, Nasdaq 1.76% (Updates to market open)

By Ambar Warrick and Devik Jain

Dec 21 (Reuters) - Wall Street's main indexes fell on Monday, as a more-virulent strain of the coronavirus in Britain sparked fears of fresh disruptions and weighed on investors' expectations of a vaccine-led economic rebound.

The strain, which is said to be up to 70% more transmissible than the original, forced many countries to shut their borders with the United Kingdom. the 11 major S&P sub-indexes fell, with energy shares .SPNY leading declines as crude prices slipped on concerns of waning fuel demand. Chevron Corp (NYSE: CVX ) CVX.N , Exxon Mobil Corp (NYSE: XOM ) XOM.N and Occidental Petroleum Corp (NYSE: OXY ) OXY.N dropped between 2% and 5% in early trading. O/R

Travel-related stocks, among the hardest hit by the pandemic-fueled restrictions, fell. The S&P 1500 airlines index .SPCOMAIR slid 3%, even as carriers were poised to receive $15 billion in new payroll assistance as part of a new coronavirus stimulus package.

Cruise operators Royal Caribbean Cruises Ltd RCL.N , Carnival Corp (LON: CCL ) CCL.N and Norwegian Cruise Line Holdings Ltd NCLH.N shed between 3.8% and 4.5%.

"The precautions required to assess the potential harm of the new COVID-19 strain will undoubtedly introduce additional risk to markets, which expected a smooth return to normal life following the vaccine's rollout," said James McDonald, CEO and chief investment officer of Hercules Investments in Los Angeles.

The CBOE Volatility Index .VIX , also known as Wall Street's "fear gauge", jumped to its highest level since early November and was last at 28.38 points.

At 10:20 a.m. ET, the Dow Jones Industrial Average .DJI was down 389.55 points, or 1.29%, at 29,789.50, the S&P 500 .SPX was down 69.13 points, or 1.86%, at 3,640.28, and the Nasdaq Composite .IXIC was down 224.62 points, or 1.76%, at 12,531.02.

U.S. congressional leaders were poised to vote on a $900 billion relief package to provide fresh aid to the virus-stricken economy. Optimism over the bill had helped Wall Street indexes hit record highs last week. S&P financials sector .SPSY posted the smallest decline, helped by gains in Goldman Sachs (NYSE: GS ) GS.N , Citigroup Inc (NYSE: C ) C.N , Morgan Stanley (NYSE: MS ) MS.N , Bank of America Corp (NYSE: BAC ) BAC.N and JPMorgan Chase & Co (NYSE: JPM ) JPM.N .

Shares rose between 0.4% and 5.3% after the Federal Reserve permitted major lenders to pay out dividends and buy back stock on a limited basis following a stress test. Inc NKE.N jumped 5.4% following multiple price target raises after the athletic apparel maker raised its full-year revenue forecast. maker Tesla Inc TSLA.O , which has soared more than 690% so far this year, slipped 5.3% in its debut on the benchmark S&P 500 index. Martin Corp LMT.N fell 2.2% after it agreed to buy U.S. rocket engine manufacturer Aerojet Rocketdyne Holdings Inc AJRD.N for $4.4 billion. Shares of Aerojet climbed 22%. Boeing (NYSE: BA ) Co BA.N slipped 2.2% on a U.S. Senate report that company officials "inappropriately coached" test pilots during recertification efforts. issues outnumbered advancers for a 4.97-to-1 ratio on the NYSE, and for a 2.98-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and no new low, while the Nasdaq recorded 78 new highs and 14 new lows.

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