A Black Friday Selloff

By Connor Smith |  Friday, November 26 Black Friday. U.S. equities sank during Friday's holiday-shortened trading session. Worries about a new Covid-19 "variant of concern" -- labeled Omicron by the World Health Organization -- triggered the stock selloff. The Dow Jones Industrial Average fell 905 points, or 2.5%, the benchmark's worst day since Oct. 28, 2020. The S&P 500 didn't fare much better. The large-cap index fell 2.3%, with cruise lines like Royal Caribbean Group, Norwegian Cruise Line Holdings, and Carnival all closing down more than 10%. The CBOE Volatility Index jumped 54% on the day -- its largest increase since January -- to close at 28.62. Over the summer, the VIX had been as low as 14. Meanwhile, crude oil tumbled 13.1%, to $68.15 a barrel. The 10-year Treasury yield saw its largest single-day decline since March 2020,  falling 16 basis points, to 1.484%.   Amid the uncertainty, traders turned to the early-pandemic playbook. Traders flocked to popular stay-at-home plays like Zoom Video Communications, Peloton Interactive, and Roku. Such companies are down year-to-date after blockbuster 2020's. Investors should tread carefully -- the stay-at-home trade hasn't paid off for some time. The World Health Organization says Omicron, or B.1.1.529, was first identified in South Africa but has been found in Hong Kong, Israel, and Belgium, writes Barron's Matt Smith. “The new Covid-19 virus variant—Omicron—has a large number of mutations, some of which are concerning,” Director-General of the WHO Tedros Adhanom Ghebreyesus said on Twitter after the designation. The variant has emerged so rapidly that scientists don’t yet know exactly how fast it spreads, how it reacts to vaccines, nor to antibodies in people who had recovered from an earlier Covid-19 infection. The WHO says those questions might take weeks to answer. “It is something that has emerged in South Africa and is spreading at a reasonably rapid rate,” said Dr. Anthony Fauci during a CNN interview in advance of a Friday WHO information-sharing meeting. President Joe Biden said Friday he is ordering travel restrictions from South Africa and seven other countries. Earlier on Friday, the European Union proposed halting air travel from southern Africa and the U.K. added South Africa and five neighboring countries to its travel "red list," requiring travelers to quarantine on arrival, writes Barron's Callum Keown. “Headlines calling it the ‘worst ever variant’ have caused investors to panic and dump shares in travel-related stocks for fear that we’re going to see tough travel restrictions once again,” said AJ Bell investment director Russ Mould. “This is the worst possible news for airline operators as they were just starting to see a pick-up in trading, helped by people becoming more comfortable about traveling on a plane and routes like U.S.-U.K. reopening,” he added. Dr. Jenny Harries, chief executive of the U.K. Health Security Agency, said the new variant was a “clear reminder” that the pandemic is not over. Not exactly the Black Friday news we were hoping for.  Watch our TV show on Fox Business Fridays at 9 p.m. or 10:30 p.m. ET; Saturdays at 11 a.m.; or Sundays at 10 a.m. or 11:30 a.m. ET. This week, a buyers' guide to hot markets, including an interview with wealth-management expert Ric Edelman on crypto.

 

DJIA:  -2.53% to 34,899.34 S&P 500: -2.27% to 4,594.62 Nasdaq: -2.23% to 15,491.66 The Hot Stock: Moderna +20.6% The Biggest Loser: Royal Caribbean Group -13.2% Best Sector: Health Care -0.4% Worst Sector: Energy -4.0%