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End of Day Brief - Friday Nov 26 - Markets down on Covid fear

SP 5004594.62-106.84(-2.27%)
10-yr Note +13/321.494
NYSEAdv 453 Dec 2769 Vol 741.3 mln
NasdaqAdv 953 Dec 3399 Vol 3.4 bln

Industry Watch

Strong: Health Care
Weak: Energy, Financials, Industrials, Real Estate, Consumer Discretionary

Moving the Market

-- Omicron variant catalyzes risk-off trade in shortened session

-- Stocks, Treasury yields, and oil prices drop noticeably

-- Strength in vaccine makers and stay-at-home stocks

Covid variant creates a sell-off in shortened session

Dow -905.04 at 34899.34, Nasdaq -353.57 at 15491.67, S&P -106.84 at 4594.62

[BRIEFING.COM] The major indices dropped more than 2.0% on Friday, as investors sold risk assets after the discovery of a highly-mutated variant of COVID-19 in South Africa. The S&P 500 fell 2.3%, the Nasdaq Composite fell 2.2%, and the Dow Jones Industrial Average fell 2.5%. The small-cap Russell 2000 underperformed with a 3.7% decline.

The visceral reaction was linked to uncertainty if the variant (Omicron) is resistant to current vaccines and concerns that it could slow down the global recovery effort. Investors, many of whom were caught off guard, de-risked first and waited for answers later. On a related note, the World Health Organization designated Omicron a "variant of concern."

All 11 S&P 500 sectors closed in negative territory, ten of which fell between 1.4% (consumer staples) and 4.0% (energy). The 10-yr yield was down 16 basis points to 1.49% ahead of the bond market close at 2:00 p.m. ET. WTI crude futures fell 12.3% (-$9.57) to $68.80/BBL. The CBOE Volatility Index popped 54% to 28.62.

The health care sector outperformed on a relative basis with a 0.5% decline due to strength in vaccine makers likes Pfizer ($PFE 54.00, +3.11, +6.1%) and Moderna ($MRNA 329.63, +56.24, +20.6%). Stay-at-home stocks like Zoom Video ($ZM 220.21, +11.91, +5.7%) also posted decent gains.

Notably, rate-hike expectations were dialed back today. According to the CME FedWatch Tool, the probability for a rate hike in May 2022 decreased to 36.4% from 55.3% on Wednesday, and the probability for a rate hike in June 2022 decreased to 61.8% from 82.1% on Wednesday.

Appropriately, the fed-funds-sensitive 2-yr yield was down 12 basis points to 0.52% after rising 13 basis points over the prior three sessions. The U.S. Dollar Index fell 0.7% to 96.11.

The Omicron news overshadowed the typical news coverage of Black Friday, which Macy's ($M 30.48, -1.66, -5.2%) said was off to a great start. It was also a bad day for Merck ($MRK 79.16, -3.12, -3.8%) to announce that its COVID-19 oral antiviral reduced the risk of hospitalization or death by 30%, according to a late-stage study, versus 48% in interim data.

Investors did not receive any economic data on Friday. Looking ahead, investors will receive Pending Home Sales for October on Monday.

  • S&P 500 +22.3% YTD
  • Nasdaq Composite +20.2% YTD
  • Dow Jones Industrial Average +14.0% YTD
  • Russell 2000 +13.7% YTD

Source: (

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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