(Bloomberg) -- Stock speculators rattled by the spread of a new Covid variant were in no mood for patience heading into what could be a heavy weekend of news.
The S&P 500 sank to session lows in the afternoon as anxiety swept across the market and more countries slammed the door on travelers from southern Africa. With trading volumes thin after Thanksgiving, there was no sign of a buy-the-dip rally coming to the rescue.
“Valuations are high and given the uncertainties, the market sells first and asks questions later,” said Cesar Perez Ruiz, chief investment officer of Pictet Wealth Management.
Now a barrage of headlines looms on everything from new travel limits and scientific investigations to data on new cases of the strain. And lightly staffed trading desks on Wall Streets are all asking the same question: how quickly can the virus spread and is it resistant to vaccines?
Until more is known, traders said markets are bound to be volatile. BioNTech is expecting the first data from laboratory tests about how it interacts with its vaccine within two weeks.
“The most worrying thing about the new strain at the moment is how little we know about it,” wrote Craig Erlam, a senior market analyst for the U.K. and EMEA at brokerage Oanda. “We’ll no doubt learn more in the days and weeks ahead but for now, the fear of the unknown will weigh heavily.”
Other strategists saw a silver lining. “At last, a dip,” wrote Citigroup Inc.’s equity strategist Robert Buckland, urging investors to pick up beaten down financial shares, as well as unloved stocks in the U.K. and Japan. The selloff means their market targets now imply a 7% gain for 2022, he added.
“Many investors had been complaining about ever-rising markets that give little entry opportunities,” said Martin Moeller, Union Bancaire Privee co-head of Swiss & global portfolio management. “Here is the next one shaping up.”
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