Stocks down after discovery of new COVID-19 variant

Stock market futures dropped on Friday amid uncertainty about a newly discovered COVID-19 variant.

Video transcript

- Well, let's get to the markets here because fears over a new variant after South Africa raising the alarm, triggering some fear that you can see on the shortened trading day. You're looking at the Dow futures off just over 2%. S&P off nearly 2, just over 1 and 1/2%. The NASDAQ futures off just around 1% as well. Travel stocks taking a significant hit on the heels of this development of a new variant.

UK suspending flights from six African countries. Delta, United, American just some of the names under pressure this morning. Cruise lines are also selling off on this news. This bid for safe haven assets. You're looking at that bond yields dropping, the 10 year yield falling back just towards one five. Financials are also falling alongside this move.

And Jared, there's still a lot of unknown I think about this variant. But what we do know, it looks to be enough to rattle markets this morning. Because this is a pullback that we haven't seen now in quite some time.

- That's right I was looking at the Dow futures when they opened last night. And they are the weakest among the stock futures that we're tracking this morning on the Wi-Fi interactive by the way. And you can see the Dow off over 2% right now. I think it had been down about 800 points off of the lows. And then the NASDAQ down about 1% and the S&P in the middle down about 1 and 2/3 of a percent.

But the small caps really taking it here on the chin. They are down 3%. Small caps tend to get hit disproportionately harder when we see this Delta variant rise. Now, I want to show a chart of something that happened in 2009. Why 2009? Because Thanksgiving Day was a huge trading day. Dubai World which had been conducting-- which was involved in many skyscraper projects, they announced that they were going to default on their debt.

This rocked markets and it actually kicked off the global sovereign debt crisis. As you can see on your screen, happened right here. But that dip was bought early on in the European session that night. Market traded pretty much sideways for a couple of weeks. And then towards the end of the year, we got that infamous Santa Claus rally.

Next year 2010, a lot of problems in the market. But my point is there's a lot of liquidity in the market right now. And if you're a portfolio manager, you've got to be thinking, what's on sale today in terms of stocks? What do I want to be inside my portfolio at the end of the year? Maybe I'm going to buy those things.

And what are those things that have gotten beaten down today? Let's take a look at our sector heat map. I'm going to turn on our after hours quotes here, just one second. And we're going to see that the value stocks are really what's taking it most of the downside.

Energy here, that is off 4 and 1/2 in early trading. Financials off 3% and industrials off 2 and 1/2%. So if you're a portfolio manager and you have the wrong stocks right now and you're underperforming, maybe you buy these. If you're a short term trader, maybe you buy the work from home trade. Let's see how that's doing this morning.

My point is that you don't have to necessarily do something. But there are a lot of decisions being made today. And you can see some of these work from home stocks really up nicely. Zoom video, that's up over 9%. Teladoc up 7%. So maybe Cathie Wood portfolio looking a little brighter today. Seana.


- Yeah I was going to say, Seana, real quick, I was just talking all my trader friends this morning here. And I was just playing off what Jared mentioned. It will be interesting to see if we get some buying activity on the lows of the session here. My friend Tom Essaye over at Sevens Report Research telling me, unless any research is presented that implies this COVID variant can resist the vaccine or other therapeutics, any COVID related drop in the market is likely an ultimate buying opportunity.

And also want to put a little more context on this. I know there's a lot of concerns about the COVID variant these concerns have been building over the past two weeks at a time when we see very rich valuations in the market. But my friend Keith Lerner over at Truist sent me an email this morning, just really reminding folks that corporations and consumers remain in a much different situation, I would say, this year compared to last year when COVID is raging.

You have corporations sitting on a ton of cash. You have-- I'm surrounded by retailers all morning long here today. And there's a dog actually sitting right under my feet here that you can't see. But anyway, I'm surrounded by a lot of retailers this morning that have closed hundreds of stores. There's been a lot of excess taken out of this economy here.

And I think if there are more lockdowns, whether it's overseas, you know we're not even-- let's not even touch on the US here for a second. If there are more lockdowns, I think you have companies with a lot more cash on their balance sheets. And you have consumers with a savings rate close to 10%. So a little bit different situation economically this year versus last.

- Yeah certainly, it's going to be interesting to see whether or not these developments do affect consumers heading out to the stores this holiday season.

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