Fear of Another COVID-19 Variant Sends Actions, Oil Prices Go Down

The S&P 500 traded lower in a shortened trading week amid concerns over the potential economic impact of a new variant of the coronavirus.

On Thursday, the World Health Organization issued warnings about a new variant of the highly mutated coronavirus detected in South Africa. Investors sold risky assets on Friday in response to the news, triggering a 1,000 point drop at one point in the Dow Jones Industrial Average and massive sales of oil, cryptocurrencies and airline stocks and of cruises.

Earlier in the week, President Joe Biden announced he was appointing Federal Reserve Chairman Jerome Powell for a second term and appointing Fed Governor Lael Brainard as vice chairman. Biden’s decision to retain Powell for another term was widely expected among economists as the Fed navigates a difficult economic environment of labor shortages, supply chain disruptions and inflation high.

On Tuesday, the White House announced that the United States would release 50 millions barrels of crude oil from its strategic oil reserve to combat rising global energy prices. Crude oil prices and oil stocks initially traded higher after the announcement, but oil prices fell 12% on Friday to their lowest levels since September, fearing the new variant could have a negative impact on global demand.

Also on Tuesday, Tesla CEO Elon Musk exercised options to buy 2.15 million Tesla shares and sold 934,091 of them worth more than $ 1 billion. Musk unloaded 9.2 million Tesla shares in November worth about $ 9.9 billion.

Nordstrom misses the mark

Nordstrom shares fell more than 30% after the company reported a third-quarter shortfall and Nordstrom Rack sales which remain down 8% from 2019 levels.

Over the coming week, the third quarter earnings season continues with reports from Zscaler and Salesforce on Tuesday and Crowdstrike and Snowflake on Wednesday.

At least 342 S&P 500 companies mentioned “supply chain” in third-quarter earnings calls, with the highest number of mentions in any quarter dating back to at least 2010, according to FactSet.

Job figures expected next Friday

Following the announcement of the new variant of the coronavirus, Wall Street will receive more economic updates on Monday when Fed Chairman Powell delivers a speech at the “Introducing the New York Innovation Center” event and again on Friday when the Department of Labor will release its November US employment report.

Benzinga is a financial information and data company headquartered in Detroit.


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Felix J. Dixon