Stocks Down On Concerns Over New COVID-19 Strain

The SPDR S&P 500 ETF Trust SPY traded down Friday on concerns about a new, heavily mutated COVID-19 variant.

What Happened? Stocks tumbled in a holiday-shortened trading session on Friday after World Health Organization officials warned Thursday of a new COVID-19 variant that has been detected in South Africa. On Friday morning, officials in Belgium confirmed at least one case of the new variant as well.

UPDATE: The WHO named the variant after the Greek letter Omicron Friday and designated it as a variant of concern. 

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Why It’s Important: The new COVID-19 variant contains more mutations to the virus’ spike protein than the highly contagious delta variant. The spike protein is the part of the virus that binds to cells, and the additional mutations have scientists concerned that the new variant could potentially have more resistance to vaccines, although WHO officials said investigation of the new variant is needed.

In addition to stock prices, oil prices and cryptocurrencies also took big hits as investors dumped risk assets and investments could get hit by lockdowns and travel restrictions. The United States Oil ETF USO was down 5.4%, while Bitcoin BTC/USD prices dropped 7.1% to under $55,000.

Safe haven assets traded higher on Friday morning. The SPDR Gold Trust GLD was up 1%, while the iShares 20 Plus Year Treasury Bond ETF TLT was up 1.2%.

Shares of airline stock American Airlines Group Inc AAL dropped 7.5%, while United Airlines Holdings Inc UAL traded lower by 8.3%.

Benzinga’s Take: The two things investors don’t want to hear when it comes to new COVID-19 mutations is anything that would potentially make the virus more deadly or more resistant to the vaccines. The U.S. currently has a seven-day average COVID-19 daily death total of 1,020, down from more than 2,000 in September and more than 3,300 in January during previous peaks in COVID-19 breakouts.