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Wall Street fears escalated on Friday as a new, highly mutated COVID-19 variant It is learned in South Africa that prompted some countries to reimpose travel restrictions, reiterating fears that a resurgent virus could derail the recovery of the global economy.

The Cboe Volatility Index, or VIX, helps gauge the level of fear among investors; It rose 54% to 28.62 during trading on Friday. While this marks the highest level for the index since May 2021, it is still well below the levels seen in the early days of the pandemic (in April 2020, the gauge peaked at around 42).

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This is the biggest intra-day increase for the measure since January 2021, before COVID-19 vaccines were readily available to most Americans.

Dow posts biggest single-day decline of this year as new COVID-19 variant triggers market sell-off

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The spike comes after health officials warned of a new type found in South Africa that has a high number of mutations and has spread rapidly among young people.

The World Health Organization held an emergency meeting on Friday to discuss the potential risks of the new variant – now named “Omicron” – and ultimately decided to label it as “a highly transmissible virus of concern”. . Preliminary evidence suggests an increased risk of reinfection.

While it was not immediately clear how effective the vaccines were against the new variant, mRNA vaccines – such as those developed by Pfizer and Moderna – can be easily updated.

The economic effects of the new tensions – which have been found in Hong Kong, Belgium and Israel as well as South Africa – were already being felt on Friday, with at least 10 European countries suspending air travel from southern Africa Was. NS The 27-nation European Union also recommended An “emergency break” on the journey from southern Africa, citing the “very concerning” new edition.

The US also said it would restrict travel to non-citizens from South Africa starting Monday. White House Chief Medical Adviser Dr. Anthony Fauci has informed President Biden about the matter.

(Photo by Timothy A. Clary-Pool/Getty Images)

“The economic recovery has been quite impressive, and the one thing that could end it altogether would be a more dangerous version of it,” said Ryan Detrick, chief market strategist at LPL Financial. “Time will tell how concerned we should be, but investors are selling in the face of potentially bad news.”

Fears of new tensions drove shares down during Friday’s trading session, which ended at 1 p.m. ET due to the Thanksgiving holiday.

The Dow Jones Industrial Average ended the day down 905 points, or 2.5%, for its biggest one-day point and biggest percentage drop since October 2020. Meanwhile, the S&P fell 2.27%, which is also its biggest one-day drop. From October 2020. The tech-heavy Nasdaq Composite dropped 2.23%.