By Akash Sriram
Nov 26 (Reuters) – Companies benefiting from this year’s economic reopening, including AMC Entertainment, United Airlines and Carnival Corp, were hammered on Friday by fears that a possibly vaccine-resistant coronavirus variant could mar their recovery.
The variant, detected in South Africa, prompted several countries to tighten border controls and investors around the globe to dump equities for safer assets. MKTS/GLOB
Travel and leisure stocks bore the brunt of the selloff in the United States, with carriers United UAL.O, Delta Air DAL.N and American Airlines AAL.O losing between 8% and 10% to open at their lowest levels in several months.
Hotel chains Hyatt H.N, Marriott MAR.O and Hilton HLT.N fell between 8% and 11%, while cruise operators Carnival CCL.N, Royal Caribbean RCL.N and Norwegian NCLH.K slumped about 10% each. Theater chain AMC AMC.N sank 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, however, sparked a rally in last year’s stay-at-home darlings such as fitness company Peloton PTON.O, Zoom Video Communications ZM.O, and videogame publisher Take-Two TTWO.O.
“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.
U.S. retail stocks slide on Black Friday as new virus worries arise
(Reporting by Akash Sriram, Subrat Patnaik, Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru; Editing by Aditya Soni)
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