Stocks finished notably in the red (down) on the holiday-shortened trading day last Friday. The Dow Jones Industrial Average tumbled over 900 points (about 2.5%), while the Standard & Poor’s 500 Index and NASDAQ Composite each fell about 2 1/4 percent. The culprit was reports of a new COVID variant detected in South Africa, now named Omicrom, which struck fear in the stock market and triggered the sharp selloff. Worries are the new variant may be more transmissible and have more resistance to vaccines.
With very little in the way of certainty (and lots of uncertainty) regarding the variant, investors took no chances and decided to sell first and ask questions later. With risk of a possible global economic slowdown – travel stocks, industrials, financials, and energy were among the hardest hit groups in the stock market, while the stay-at-home trade outperformed. In a flight to safety, treasuries rallied in price as yields retreated (as prices go up yields fall). For the week as a whole – the Dow finished down 2% to 34,899 – the S&P lost 2.2% to 4,595 and the NASDAQ lost 3.5% to 15,492.
During the week ahead, the market will be intently focused on the new COVID variant and its ramifications. Away from that and on to more routine news, the big data point for the market is the November Jobs Report scheduled to be released Friday morning. Consensus estimates are the U.S. economy added about 530,000 jobs in November, and that the unemployment rate will improve a notch to 4.5%. Looking at the market open this morning, the averages are all in positive territory after Friday’s sell off – even though investors are dealing with a lot of uncertainty.
As always, feel free to contact us with any questions or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC