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* Travel, banking, energy stocks lead declines
* Pfizer hits record high
* Dow eyes worst day since October 2020
* Indexes fall: Dow 2.5%, S&P 1.8%, Nasdaq 1.4%
Nov 26 (Reuters) - The Dow dragged Wall Street's main
indexes lower on Friday, with travel, bank and commodity-linked
stocks bearing the brunt of a selloff triggered by the discovery
of a new and possibly vaccine-resistant coronavirus variant.
Cruise operators Carnival Corp, Royal Caribbean
Cruises and Norwegian Cruise Line plunged more
than 9% each, while shares in United Airlines, Delta Air
Lines and American Airlines slumped almost 10%.
Ten of the 11 major S&P sectors dropped in early trading,
with energy sliding 6.3% followed by financials
The domestically focused Russell 2000 small-cap index
tumbled 3.6%, hitting its lowest level in over four weeks.
The S&P 500 banks index dived 5.1% as investors
pared back bets of faster U.S. interest rate hikes.
Global stock markets sold off sharply after reports that the
new variant was detected in South Africa, with scientists saying
it has an unusual combination of mutations, may be able to evade
immune responses and could be more transmissible.
The European Union, Britain and India were among places to
announce stricter border controls. A top U.S. infectious disease
official said a ban on flights from southern Africa was a
"Equities are reacting negatively because it is unknown at
this point to what degree the vaccines will be effective against
the new strain, and thus it increases risk of new lockdowns
which leads to an economic hit," said Peter Garnry, head of
equity strategy at Saxo Bank.
At 10:06 a.m. ET, the Dow Jones Industrial Average
was down 906.49 points, or 2.53%, at 34,897.89, tracking its
worst day since late October 2020.
The S&P 500 was down 86.05 points, or 1.83%, at
4,615.41 and the Nasdaq Composite was down 214.71
points, or 1.36%, at 15,630.52.
The CBOE volatility index, popularly known as Wall
Street's fear gauge, jumped to its highest level since Sept. 20.
Elevated U.S. inflation, coupled with strong economic data
and the renomination of Jerome Powell as the Fed chair by
President Joe Biden, had prompted market participants to raise
their bets on early interest rate hikes next year, knocking U.S.
stocks off their record levels this week.
"(New variant news) seems to be a big catalyst adding some
negativity into an already overvalued market looking for a
reason to take a breather," said Jeff Carbone, managing partner
at Cornerstone Wealth.
"Stay-at-home" names such as Netflix Inc, Peloton
Interactive and Zoom Video Communications jumped
between 1.3% and 8.4%.
The defensive healthcare sector outperformed,
boosted by vaccine makers including Pfizer Inc and
partner BioNTech SE as well as Moderna Inc
which climbed between 7.3% and 21.9%.
Trading volumes are expected to be light in the short
trading session as markets close at 1:00 p.m. ET, a day after
the Thanksgiving holiday.
Declining issues outnumbered advancers for a 7.68-to-1 ratio
on the NYSE and a 5.17-to-1 ratio on the Nasdaq.
The S&P index recorded six new 52-week highs and 19 new
lows, while the Nasdaq recorded 12 new highs and 203 new lows.
(Reporting by Medha Singh, Devik Jain, Bansari Mayur Kamdar and
Sruthi Shankar in Bengaluru; Editing by Maju Samuel)