Stock futures jumped Monday morning to recover some losses after Friday’s slide, when uncertainty over a new coronavirus variant stoked volatility across global markets.
Contracts on the Dow gained more than 150 points, or 0.5%. On Friday, the index had seen its worst day since October 2020, dropping more than 900 points, or 2.5%.
U.S. airlines and other travel stocks were mostly higher to steady after steep losses from late last week, when initial concerns over the newly discovered Omicron variant of the coronavirus in South Africa fueled fears over renewed global restrictions. Meanwhile, Zoom Video Communications (ZM), Peloton (PTON) and other stocks that have been mainstays of the “stay-at-home” trade gave back some of Friday’s gains. Technology stocks that had become defensive plays during the pandemic largely held up on Monday, however, and Nasdaq futures outperformed.
“Ultimately this is not the first or last variant scare and our tech playbook over the last 18 months has been to use these macro/risk-off events as buying opportunities to own the tech sector specifically cloud, cyber-security, and 5G winners,” Wedbush analyst Dan Ives wrote in a note Monday morning. “While we are seeing a return to normalcy, a semi-remote workforce environment we believe is here to stay which underscores our tech cloud thesis into 2022 that the digital transformation build-out will be accelerated and is not a one time COVID pull forward event”
The U.S. and European Union have been among a host of destinations to ban flights from several African countries after the new variant was discovered. But cases of the variant, which the World Health Organization (WHO) has so far designated as a “variant of concern,” have also detected in regions including the U.K., Hong Kong, Australia, Germany and Italy, among others. Japan, Israel and Morocco each announced in the past few days they would be blocking foreign visitors from visiting amid the latest variant’s spread.
While much is still yet to be confirmed about the Omicron variant — including whether it is more transmissible or causes more severe illness than previous variants — vaccine makers have already said they are working to adapt their existing inoculations to the new strain. Moderna’s (MRNA). Chief Medical Officer Paul Burton told BBC on Sunday that a new vaccine to address Omicron could be widely available in early 2022. Pfizer (PFE) and BioNTech (BNTX) said last week they expected to have data on the latest variant within two weeks, and it could take about 100 days to create a vaccine specifically tailored to a new variant. The WHO has said preliminary evidence about Omicron suggested “an increased risk of reinfection with this variant, as compared to other [variants of concern].”
Many market pundits have maintained it is still too early to tell how Omicron behaves from an epidemiological standpoint and how it will impact economic activity, should lockdowns or stay-in-place behavior broaden out.
“What should we be looking for? A strong leading indicator will be what happens to hospitalizations and deaths in South Africa, where this has become dominant. If there is a noticeable spike, then that carries concerning implications for elsewhere,” Henry Allen, Deustche Bank research analysts, wrote in a note.
“Nevertheless, there are two key differences worth bearing in mind between South Africa and much of the developed worked: First, Europe and the U.S. have much higher vaccination rates, which (assuming the vaccine is not ineffective) may offer greater protection,” he added, noting that South Africa has fully vaccinated 24% of its population compared to 58% in the U.S. and 69% in France. “This suggests they may have advantages relative to South Africa. But second, Europe and the U.S. have much older populations, and age is a factor that strongly correlates with the likelihood of hospitalization and death. In South Africa, the median age in the country is 28, much lower than Western Europe’s median age of 44.”
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8:45 a.m. ET: Vaccine-makers’ stocks jump as companies work on shots to address Omicron
Shares of major COVID-19 vaccine-makers including Pfizer, BioNTech and Moderna jumped Monday morning after executives from these companies said they were working on inoculations that would directly address the new Omicron version of the virus.
BioNTech American depository receipts were up more than 5.5% in pre-market trading. Pfizer shares gained 1.7%, while Moderna shares outperformed with a jump of more than 10% in the early session.
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7:45 a.m. ET Monday: Stock futures recover some losses
Here were the main moves in markets ahead of the opening bell
S&P 500 futures (ES=F): +31.75 points (+0.69%), to 4,627.50
Dow futures (YM=F): +180 points (+0.52%), to 35,038.00
Nasdaq futures (NQ=F): +132 points (+0.82%) to 16,183.00
Crude (CL=F): +$3.33 (+4.89%) to $71.48 a barrel
Gold (GC=F): +$5.20 (+0.29%) to $1,793.30 per ounce
10-year Treasury (^TNX): +6.2 bps to yield 1.547%
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
