By Akash Sriram
(Reuters) – Companies benefiting from this year’s economic reopening, including AMC Entertainment, United Airlines and Carnival Corp, were hammered on Friday by fears over a new and possibly-vaccine resistant coronavirus variant.
The variant, discovered in South Africa, prompted several countries to tighten border controls and investors to dump Asian and European equities for safer assets.
Trading before the bell showed U.S. stocks were set to join the selloff, with carriers United, Delta Air and American Airlines losing between 8% and 9%.
Hotel chains Hyatt, Marriott and Hilton fell between 4.7% and 6%, while cruise operators Carnival, Royal Caribbean Cruises and Norwegian Cruise Line plunged 10% each. Theater chain AMC lost 6.2%.
Little is known of the variant but scientists say it has an unusual combination of mutations, may be able to evade immune responses and could be more transmissible.
“The economic recovery has been quite impressive and the one thing that could knock it over completely would be a more dangerous variant. Time will tell how worried we should be, but investors are selling in front of potential bad news,” said Ryan Detrick, senior market strategist at LPL Financial.
The news of the variant, however, sparked a rally in last year’s stay-at-home darlings such as fitness company Peloton, streaming giant Netflix and Zoom Video Communications, sending them up between 6% and 9%.
“Investment gods have given the late-to-sell investors a second opportunity to do so because the stocks that did well in the COVID lockdown, like Peloton or Zoom, are probably going to do well once again,” said Sam Stovall, chief investment strategist at CFRA Research.
(Reporting by Akash Sriram, Subrat Patnaik, Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru; Editing by Aditya Soni)
