US stocks closed lower on Friday, with the Dow Jones Industrial Average and S&P 500 suffering their biggest one-day percentage drops in months, and pandemic-hit sectors that had gained from a reopening falling sharply after a new SARS-CoV-2 mutation was found.
Authorities worldwide reacted with alarm on Friday to the variant found in South Africa, since named Omicron, with the EU and UK among those tightening border controls as researchers sought to establish if it was vaccine-resistant.
Cruise operators Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise Line Holdings each plunged more than 10 percent, while shares in United Airlines Holdings Inc, Delta Air Lines Inc and American Airlines Group Inc also tumbled.
The New York Stock Exchange (NYSE) Arca Airline Index fell 6.45 percent in its biggest one-day percentage decline since September last year.
Retailers dropped 2.04 percent as Black Friday started the holiday shopping season with worries that the new variant would depress store traffic and curb supply.
Selling was broad, with big declines of more than 1 percent in all 11 major S&P sectors except healthcare, which fell just 0.45 percent thanks to COVID-19 vaccine makers Pfizer Inc rising 6.11 percent to close at a record high of US$54 and Moderna Inc jumping 20.57 percent.
“It is deja vu all over again for like the eighth time,” said Keith Buchanan, senior portfolio manager at Global Investments in Atlanta.
“What we understand about this variant could accelerate over the weekend, if there is more concerning news than good news, a lot of people don’t want to be holding risk assets on Monday morning, or are afraid of what that could look like Monday morning,” he said.
Despite the sell-off, market participants said the drop was likely exaggerated by the thin volume during the shortened post-Thanksgiving holiday session.
The Dow Jones Industrial Average fell 905.04 points, or 2.53 percent, to 34,899.34; the S&P 500 lost 106.84 points, or 2.27 percent, to 4,594.62; and the NASDAQ Composite dropped 353.57 points, or 2.23 percent, to 15,491.66.
For the week, the Dow fell 1.97 percent, the S&P 500 lost 2.2 percent and the NASDAQ Composite slumped 3.52 percent.
The domestically focused Russell 2000 small-cap index fell 3.67 percent on Friday. Both the S&P 500 and small cap Russell index posted their biggest one-day percentage drops since Feb. 25.
The S&P 500 banks index dropped 3.87 percent as investors dialed back expectations of faster US interest rate hikes. Energy, this year’s best performing sector, dropped 4 percent on the day, its biggest decline in more than eight months, as crude prices plunged US$10 a barrel.
Elevated US inflation, coupled with strong economic data and the renomination of Jerome Powell as US Federal Reserve chair by US President Joe Biden, had fueled expectations the central bank might hike interest rates sooner than expected.
The CBOE volatility index, popularly known as Wall Street’s fear gauge, hit its highest level since early March.
Stocks such as Netflix Inc, Peloton Interactive Inc and Zoom Video Communications Inc, known as “stay-at-home” names, all scored solid advances.
Declining issues outnumbered advancers on the NYSE by a 5.84-to-1 ratio; on NASDAQ, a 3.96-to-1 ratio favored decliners.
The S&P 500 posted seven new 52-week highs and 23 new lows; the NASDAQ Composite recorded 18 new highs and 334 new lows.
DISMAL OUTLOOK: A Citigroup analyst predicted firms face ‘the worst semiconductor downturn in at least a decade,’ due to inventory build and the potential of a recession Semiconductor stocks tumbled after Micron Technology Inc became the latest chipmaker to warn about slowing demand, triggering concern that the industry is heading into a painful downturn. In the US on Tuesday, the Philadelphia semiconductor index sank 4.6 percent, with all 30 members in the red, its biggest drop in about two months. In Asia, chip stocks from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to Samsung Electronics Co, SK Hynix Inc and Tokyo Electron Ltd slumped. Investors are growing increasingly skittish as the notoriously cyclical industry is hurtling toward a prolonged slump after years of widespread shortages that led to heavy
With a tantalizing array of satay chicken, wok-fried mud crab and chilled tiger prawns, the dinner buffet at Singapore’s Grand Hyatt hotel typically sets diners back about US$70. Those on a tighter budget and with an eye on sustainability can fill a box for one-tenth of that price. Across Asia, tech start-ups are taking food otherwise destined for landfill and providing discounted meals through mobile phone apps. About one-third of food is lost or wasted every year globally, and the mountains of waste are estimated to cause 8 to 10 percent of greenhouse gas emissions such as methane, the UN says.
MAJOR REVENUE CONTRIBUTOR: The company said that it expects revenue this year to increase annually due to an improved smart consumer electronics outlook Hon Hai Precision Industry Co (鴻海精密) yesterday said revenue this quarter would be flat from last quarter, despite new phone models launched by key customers, as the market faces weakening demand. The iPhone assembler, based in New Taipei City’s Tucheng District (土城), said it is cautious about its business outlook, given mounting uncertainty regarding geopolitical tensions, soaring inflation and COVID-19 flare-ups, but still expects revenue this quarter to be higher than the NT$1.4 trillion (US$46.67 billion) it reported a year earlier. The forecast came as the company posted record second-quarter net profit of NT$33.29 billion, up 12 percent year-on-year from NT$29.78 billion.
Yageo Corp (國巨) yesterday said that its revenue would drop by a low single-digit percentage this quarter from a historical high last quarter, as customers and distributors are holding back demand to concentrate on inventory digestion due to flagging smartphone and notebook computer demand. The world’s biggest supplier of passive components expects to take three to six months to reduce its inventory of commoditized passive components to a normal level of 100 to 110 days, from 130 days currently. Yageo would reduce its factory utilization rate for standard passive components to about 60 percent this quarter, from about 70 percent last quarter,