Dow, S&P 500 suffer biggest one-day drop in months as COVID-resistant stocks fall

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Dow, S&P 500 suffer biggest one-day drop in months as COVID-resistant stocks fall

NEW YORK Reuters dropped US stocks on Friday, with the Dow and S&P 500 experiencing their biggest one-day percentage drops in months, and the pandemic-hit sectors that have benefitted from a new vaccine-resistant coronaviruses mutation.

Authorities in the world reacted to the coronaviruses found in South Africa, with the European Union and Britain tightening border controls as researchers tried to determine whether the mutation was vaccine-resistant.

Cruise operators Carnival Corp., Royal Caribbean Cruises and Norwegian Cruise Line each plunged more than 10%, while shares in American Airlines, Delta Air Lines and Royal Caribbean Cruises fell. The NYSE Arca Airline index saw its biggest day-on-day decline in over a year.

Retailers fell as Black Friday, the beginning of the holiday shopping season, was kicked off by a new variant that fueled concerns about low store traffic and inventory issues.

Selling was broad with big declines in all 11 major S&P sectors except healthcare, which fell slightly due to strong gains in COVID- 19 vaccine maker Pfizer Inc and Moderna Inc.

Keith Buchanan, senior portfolio manager at Global Investments in Atlanta said it was like the eighth time that deja vu was over again.

If there is more bad news than good news, a lot of people don't want to be holding risk assets on Monday morning, or are afraid of what could look like Monday morning. Market participants noted that the drop was likely exaggerated because of the thin volume during the shortened post-Thanksgiving holiday session.

The Dow Jones Industrial Average fell by 905.04 points, or 2.53%, to 34,899. The S&P 500 lost 106.74 points, or 2.27%, to 4,594 at 34. 72 and the Nasdaq Composite dropped 353.57 points, or 2.23%, to 15,491. The domestically focused Russell 2000 small-cap index fell more than 3%.

The S&P 500 banks index plummeted as investors dialed back expectations of faster U.S. interest rate hikes.

The central bank may hike interest rates earlier than anticipated due to the rise in U.S. inflation, coupled with strong economic data and the renomination of Jerome Powell as the Federal Reserve Chair by U.S. President Joe Biden.

The CBOE volatility index, commonly known as Wall Street's fear gauge, hit its highest level since Sept. 20.

Shares such as Netflix, Peloton Interactive, and Zoom Video Communications, known as Stay-at home names, all saw solid advances.