Mark Haefele, CIO of UBS Global Wealth Management, discusses how investors may look for any buying opportunities on a day when headlines disrupt markets to the downside. For access to live and exclusive video from CNBC subscribe to CNBC PRO: [ Ссылка ]
U.S. stocks dropped sharply on Friday as a new Covid variant found in South Africa triggered a global shift away from risk assets.
The Dow Jones Industrial Average dropped about 905.04 points, or 2.53%, for its worst day of the year, closing at 34,899.34. The S&P 500 lost 2.27% to close at 4,594.62, while the Nasdaq Composite slipped 2.23% to finish at 15,491.66. The Dow was down more than 1,000 points at session lows.
The downward moves came after WHO officials on Thursday warned of a new Covid-19 variant that’s been detected in South Africa. The new variant contains more mutations to the spike protein, the component of the virus that binds to cells, than the highly contagious delta variant. Because of these mutations, scientists fear it could have increased resistance to vaccines, though WHO said further investigation is needed. On Friday, the WHO deemed the new strain a variant of concern and named it the omicron variant.
The United Kingdom temporarily suspended flights from six African countries due to the variant. Israel barred travel to several nations after reporting one case in a traveler. Two cases were identified in Hong Kong. Belgium also confirmed a case.
“When I read that there’s one [case] in Belgium and one in Botswana, we’re going to wake up next week and find one in this country. And I’m not going to recommend anyone buy anything today until we’re sure that isn’t going to happen, and I can’t be sure that it won’t,” CNBC’s Jim Cramer said.
Bond prices rose and yields tumbled amid a flight to safety. The yield on the benchmark U.S. 10-year Treasury note fell 15 basis points to 1.49% (1 basis point equals 0.01%). This was a sharp reversal as yields jumped earlier in the week to above 1.68% at one point. Bond yields move inversely to prices.
Asia markets were hit hard in Friday trade, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng index both falling more than 2%. Germany’s Dax index slid more than 4% Bitcoin fell 8%.
The Cboe Volatility Index, often referred to as Wall Street’s “fear gauge,” rose to 28, its highest level in two months. Oil prices also tumbled, with U.S. crude futures down 12% and breaking below $70 per barrel.
Travel-related stocks were hit hardest with Carnival Corp. and Royal Caribbean down 11% and 13.2%, respectively. United Airlines dropped more than 9%, while American Airlines dropped 8.8%. Boeing lost more than 5% and Marriott International fell nearly 6.5%.
Bank shares retreated on fears of the slowdown in economic activity and the retreat in rates. Bank of America dropped 3.9% and Citigroup slid 2.7%.
Industrials linked to the global economy declined led by Caterpillar off by 4%. Chevron dropped 2.3% as energy stocks reacted to the rollover in crude prices.
On the flip side, investors huddled into the vaccine makers. Moderna shares surged more than 20%. Pfizer shares added 6.1%.
Some of the stay-at-home plays that gained in the earlier months of the pandemic were higher again. Zoom Video and Peloton each added more than 5%.
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