Wall Street Drops on Fears over New COVID-19 Strain

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(Reuters) – Wall Street’s main indexes fell on Monday, as the more-virulent strain of the coronavirus in Britain sparked fears of fresh disruptions and weighed on investors’ expectations of a vaccine-led economic rebound.

The strain, which is said to be up to 70% more transmissible then the original forced many countries to shut their borders with the United Kingdom.

All the 11 major S&P sub-indexes fell, with energy shares leading declines as crude prices slipped on concerns of waning fuel demand. Chevron Corp, Exxon Mobil Corp, and Occidental Petroleum Corp dropped between 2% and 5% in early trading. [O/R]

Travel-related stocks, among the hardest hit by the pandemic-fueled restrictions, fell. The S&P 1500 airlines index slid 3%, even as carriers were poised to receive $15 billion in new payroll assistance as part of a new coronavirus stimulus package.

Cruise operators Royal Caribbean Cruises Ltd, Carnival Corp and Norwegian Cruise Line Holdings Ltd shed between 3.8% and 4.5%.

The CBOE Volatility Index, also known as Wall Street’s “fear gauge”, jumped to its highest level since early November and was last at 28.38 points.

At 10:20 a.m. ET, the Dow Jones Industrial Average was down 389.55 points, or 1.29%, at 29,789.50, the S&P 500 was down 69.13 points, or 1.86%, at 3,640.28, and the Nasdaq Composite was down 224.62 points, or 1.76%, at 12,531.02.

U.S. congressional leaders were poised to vote on a $900 billion relief package to provide fresh aid to the virus-stricken economy. Optimism over the bill had helped Wall Street indexes hit record highs last week.

The S&P financials sector posted the smallest decline, helped by gains in Goldman Sachs, Citigroup Inc, Morgan Stanley, Bank of America Corp and JPMorgan Chase & Co.

Shares rose between 0.4% and 5.3% after the Federal Reserve permitted major lenders to pay out dividends and buy back stock on a limited basis following a stress test.

Nike Inc jumped 5.4% following multiple price target raises after the athletic apparel maker raised its full-year revenue forecast.

Electric-car maker Tesla Inc, which has soared more than 690% so far this year, slipped 5.3% in its debut on the benchmark S&P 500 index.

Lockheed Martin Corp fell 2.2% after it agreed to buy U.S. rocket engine manufacturer Aerojet Rocketdyne Holdings Inc for $4.4 billion. Shares of Aerojet climbed 22%.

Planemaker Boeing Co slipped 2.2% on a U.S. Senate report that company officials “inappropriately coached” test pilots during recertification efforts.

Declining issues outnumbered advancers for a 4.97-to-1 ratio on the NYSE, and for a 2.98-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and no new low, while the Nasdaq recorded 78 new highs and 14 new lows.

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