Fear over another COVID-19 variant sends stocks, oil prices lower

The S&P 500 traded lower in a holiday-shortened trading week on concerns about the potential economic impact of a new coronavirus variant.

On Thursday, the World Health Organization issued warnings about a new, heavily mutated coronavirus variant detected in South Africa. Investors sold risk assets Friday in response to the news, triggering a 1,000-point drop at one point in the Dow Jones Industrial Average and large sell-offs in oil, cryptocurrencies and airline and cruise stocks.

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

FILE- In this Nov. 23, 2020, file photo, a street sign is displayed at the New York Stock Exchange in New York.  (AP Photo/Seth Wenig, File)
FILE- In this Nov. 23, 2020, file photo, a street sign is displayed at the New York Stock Exchange in New York. (AP Photo/Seth Wenig, File)

On Tuesday, the White House announced the U.S. will be releasing 50 million barrels of crude oil from its Strategic Petroleum Reserve to help combat rising global energy prices. Crude oil prices and oil stocks initially traded higher following the announcement, but oil prices fell 12% on Friday to the lowest levels since September on concerns the new variant could negatively impact global demand.

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

Nordstrom misses mark

Nordstrom shares tumbled more than 30% after the company reported a third-quarter earnings miss and Nordstrom Rack sales that remain down 8% compared with 2019 levels.

In the week ahead, 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 have mentioned “supply chain” during third-quarter earnings calls, the highest number of mentions in any quarter going back to at least 2010, according to FactSet.

Jobs numbers due next Friday

Following news of the new coronavirus variant, Wall Street will get more economic updates on Monday when Fed Chair Powell gives a speech at the "Introducing the New York Innovation Center" event and again on Friday when the Labor Department releases its November U.S. jobs report.

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

This article originally appeared on Detroit Free Press: Fear over another COVID-19 variant sends stocks, oil prices lower