Wall Street drops on fears over new coronavirus strain

Wall Street's main indexes fell on Monday, as a more-virulent strain of the coronavirus in Britain sparked fears of fresh disruptions and weighed on investors' expectations of a vaccine-led economic rebound.

The strain, which is said to be up to 70% more transmissible than the original, forced many countries to shut their borders with the United Kingdom.

All the 11 major S&P sub-indexes fell, with energy shares leading declines as crude prices slipped on concerns of waning fuel demand. Chevron Corp, Exxon Mobil Corp and Occidental Petroleum Corp dropped between 2% and 5% in early trading.

Travel-related stocks, among the hardest hit by the pandemic-fueled restrictions, fell. The S&P 1500 airlines index slid 3%, even as carriers were poised to receive $15 billion in new payroll assistance as part of a new coronavirus stimulus package.

Cruise operators Royal Caribbean Cruises Ltd, Carnival Corp and Norwegian Cruise Line Holdings Ltd shed between 3.8% and 4.5%.

"The precautions required to assess the potential harm of the new COVID-19 strain will undoubtedly introduce additional risk to markets, which expected a smooth return to normal life following the vaccine's rollout," said James McDonald, CEO and chief investment officer of Hercules Investments in Los Angeles.

The CBOE Volatility Index, also known as Wall Street's "fear gauge", jumped to its highest level since early November and was last at 28.38 points.

At 10:20 a.m. ET, the Dow Jones Industrial Average was down 389.55 points, or 1.29%, at 29,789.50, the S&P 500 was down 69.13 points, or 1.86%, at 3,640.28, and the Nasdaq Composite was down 224.62 points, or 1.76%, at 12,531.02.

US congressional leaders were poised to vote on a $900 billion relief package to provide fresh aid to the virus-stricken economy. Optimism over the bill had helped Wall Street indexes hit record highs last week.

The S&P financials sector posted the smallest decline, helped by gains in Goldman Sachs, Citigroup Inc , Morgan Stanley, Bank of America Corp and JPMorgan Chase & Co.

Shares rose between 0.4% and 5.3% after the Federal Reserve permitted major lenders to pay out dividends and buy back stock on a limited basis following a stress test.

Nike Inc jumped 5.4% following multiple price target raises after the athletic apparel maker raised its full-year revenue forecast.

Electric-car maker Tesla Inc, which has soared more than 690% so far this year, slipped 5.3% in its debut on the benchmark S&P 500 index.

Lockheed Martin Corp fell 2.2% after it agreed to buy US rocket engine manufacturer Aerojet Rocketdyne Holdings Inc for $4.4 billion. Shares of Aerojet climbed 22%.

Planemaker Boeing Co slipped 2.2% on a US Senate report that company officials "inappropriately coached" test pilots during recertification efforts.

Declining issues outnumbered advancers for a 4.97-to-1 ratio on the NYSE, and for a 2.98-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and no new low, while the Nasdaq recorded 78 new highs and 14 new lows.