Dow ends 2.5% lower as new Covid-19 variant causes year’s worst drop

A trader works on the floor of the New York Stock Exchange in New York, on Nov 26, 2021. PHOTO: REUTERS

NEW YORK (AFP) - The new Covid-19 variant that has prompted travel restrictions worldwide caused Wall Street to plunge in Friday's (Nov 26) holiday shortened session, with the Dow seeing its worst loss of the year.

The benchmark Dow Jones Industrial Average finished at 34,899.34, a loss of 2.5 per cent, or more than 900 points from the close on Wednesday, before the Thanksgiving holiday.

The broad-based S&P 500 fell 2.3 per cent to finish at 4,594.62, while the tech-rich Nasdaq Composite index declined 2.3 per cent to 15,491.66.

The equity bloodletting came after South Africa on Thursday announced the discovery of the B.1.1.529 variant of the virus, which was met with a new cascade of travel restrictions, including by Britain and the European Union.

On Friday, the World Health Organisation declared the strain a variant of concern, renaming it Omicron.

Wall Street has hit records in recent weeks, but in a session that was three hours shorter than normal due to the Thanksgiving holiday and saw low trading volume overall, investors pulled back decisively over fears the new variant could undercut the US economy's recovery.

"It's a single track market today," said Ross Mayfield, investment strategy analyst at Baird, pointing to fears the new variant could be worse than the Delta strain of the virus, which slowed US growth and hiring in the third quarter.

"I think the market's reaction to the level of uncertainty being faced right now, especially near all-time highs before this, probably makes some sense."

Travel and tourism companies were particularly hard hit in the sell-off, with Delta Air Lines closing 8.3 per cent lower, United Airlines finishing down 9.6 per cent and American Airlines losing 8.8 per cent.

Cruise firm Carnival lost 11 per cent, while Royal Caribbean fell 13.2 per cent.

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