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Wednesday, January 19, 2022

Stocks Decline Due to New COVID Variant; Dow lost 905 points

By KEN SWEET & PAUL WIEEMAN

NEW YORK (AP) – Stocks fell on Friday, with the Dow Jones Industrial Average falling briefly more than 1,000 points as a new variant of the coronavirus, first discovered in South Africa, appears to be spreading globally. Investors were unsure if this option could reverse months of progress in the fight against the COVID-19 pandemic.

The S&P 500 fell 106.84 points, or 2.3%, to close at 4,594.62 points. It was the worst day for a Wall Street benchmark since February.

The index was pulled down by everyone from banks, travel and energy companies as investors tried to change positions to protect themselves financially from the new option. The World Health Organization called this option “highly contagious.”

The price of oil fell by about 13%, the biggest drop since the start of the pandemic amid fears of another slowdown in the global economy. This, in turn, led to a drop in energy reserves. Exxon shares fell 3.5% and Chevron shares fell 2.3%.

Blue chips closed 905.04 points down and ended the day at 34,899.34 points. The Nasdaq Composite lost 353.57 points, or 2.2%, to 15,491.66 points.

“Investors are likely to shoot first and then ask questions until more is known,” Oanda’s Jeffrey Halley said in his report. This is evidenced by the activity in the bond market, where the yield on 10-year Treasuries fell to 1.48% from 1.64% on Wednesday. As a result, banks have suffered some of the biggest losses. JPMorgan Chase shares fell 3%.

There have been other variants of the coronavirus – the delta variant devastated much of the US over the summer – and investors, government officials and the general public are alarmed by any new spread. It has been nearly two years since the emergence of COVID-19, which has killed more than 5 million people worldwide to date.

Cases of the new variant have been found in Hong Kong, Belgium and Tel Aviv, as well as in major cities in South Africa such as Johannesburg.

The economic implications of this option are already being felt. Flights between South Africa and Europe have been quarantined or completely closed. The airlines’ shares sold out quickly, with United Airlines down 9.6% and American Airlines down 8.8%.

“Until recently, financial markets seemed to be putting COVID in their rearview mirror,” said Douglas Porter, chief economist at BMO Capital Markets. “At the very least (the virus) is likely to continue to throw sand at the mechanisms of the global economy in 2022, holding back the recovery (and) maintaining kinks in the supply chain.”

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Even Bitcoin got carried away with selling. The digital currency fell 8.4% to $ 54,179, according to CoinDesk.

One sign of Wall Street’s concern was the VIX, a market indicator of volatility sometimes referred to as a “fear indicator.” The VIX jumped 53.6% to 28.54, the highest since January before vaccines began to be widely distributed.

Fearing new locks and travel bans, investors have been transferring money to companies that have largely benefited from previous waves, such as Zoom Communications for meetings or Peloton for home exercise machines. Both stocks rose nearly 6%.

Coronavirus vaccine manufacturers have been among the biggest beneficiaries of this new option and the ensuing investor backlash. Pfizer shares rose more than 6%, while Moderna shares jumped more than 20%.

However, Merck shares fell 3.8%. While U.S. health officials said Merck’s experimental treatment for COVID-19 was effective, data showed the pills were not as effective at keeping patients from hospitalization as originally thought.

Investors are concerned that supply chain problems that have plagued global markets for months will worsen. Ports and cargo stations are vulnerable and could be closed by new localized outbreaks.

“The supply chains are already stretched,” said Neil Shearing, an economist at Capital Economics in London. “A new, more dangerous viral wave could force some workers to temporarily leave the workforce and deter others from returning, exacerbating the current labor shortage.”

This option also puts more pressure on central banks, which are already facing a dilemma of whether and when to raise interest rates to combat rising inflation. “The threat of a new, more serious variant of the virus could be a reason for central banks to postpone plans to raise interest rates until the picture is cleared up,” said Schering.

Trading in stocks on the Friday after Thanksgiving is generally the slowest day of the year, with the market closing at 1:00 pm ET. However, Friday’s trading volume was much higher than the usually shortened day off. Roughly 3.4 billion shares were traded on the New York Stock Exchange, only marginally less than the 4 billion shares traded per day on average.

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This was reported by Wiseman from Washington.

World Nation News Deskhttps://www.worldnationnews.com
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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