The SPDR S&P 500 ETF Trust SPY traded lower by 1% on Monday morning in part over concerns about a new strain of coronavirus that has reportedly been circulating in the U.K.
What Happened? On Saturday, the U.K. implemented strict lockdowns in London and other areas of England in response to a large spike in coronavirus infections. Prime Minister Boris Johnson said the rise in cases is in large part due to a new variant of COVID-19 that has been identified that's 70% more transmissible than the previous strain.
Why It’s Important: The FDA and regulators around the world have approved coronavirus vaccines from Pfizer Inc. PFE and Moderna Inc MRNA to combat the pandemic, but headlines that the virus has mutated in the U.K. spooked investors.
The bad news is that the variant identified in the U.K. is far more transmissible, potentially spreading at a much more rapid pace. The good news, according to former FDA commissioner Dr. Scott Gottlieb, is that the current vaccines from Pfizer and Moderna should protect against the new U.K. coronavirus strain.
“It doesn’t seem to have mutated the surface proteins of the virus in a way that they would slip past our vaccines or prior immunity,” Gottlieb told CNBC.
Airline stocks, oil stocks and travel and leisure stocks were hit particularly hard on Monday morning:
- Diamondback Energy Inc FANG was down 5.5%.
- American Airlines Group Inc (NASDAQ:AAL was down 3%
- United Airlines Holdings Inc UAL was down 3%
- Carnival Corp CCL was down 5%.
- Wynn Resorts, Limited WYNN was down 4.8%.
- Occidental Petroleum Corporation OXY was down 5.2%.
- MGM Resorts International MGM was down 4%.
- Norwegian Cruise Line Holdings Ltd NCLH was down 3.2%.
Benzinga’s Take: For now, the key concern investors have is how long the global vaccine rollout will take and how much damage a more contagious coronavirus variant will do in the meantime. However, fears that the next coronavirus mutation could reduce the effectiveness of the vaccine must be in the back of everyone’s minds.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.