From cruise operators to airlines: 'Reopening' stocks tumble on variant fears
Reuters
Published Nov 26, 2021 09:00AM ET
Updated Nov 26, 2021 10:48AM ET
By Akash Sriram
(Reuters) -Companies benefiting from this year's economic reopening, including AMC Entertainment (NYSE:AMC), United Airlines and Carnival (NYSE:CUK) 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, Delta Air and American Airlines (NASDAQ:AAL) losing between 8% and 10% to open at their lowest levels in several months.
Hotel chains Hyatt, Marriott and Hilton fell between 8% and 11%, while cruise operators Carnival, Royal Caribbean (NYSE:RCL) and Norwegian slumped about 10% each. Theater chain AMC 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 (NASDAQ:LPLA).
The news, however, sparked a rally in last year's stay-at-home darlings such as fitness company Peloton (NASDAQ:PTON), Zoom Video Communications (NASDAQ:ZM), and videogame publisher Take-Two (NASDAQ:TTWO).
"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.
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Written By: Reuters
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