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NEW YORK: The Dow dragged Wall Street’s main indexes lower on Friday, with travel, bank and commodity-linked stocks bearing the brunt of a selloff triggered by the discovery of a new and possibly vaccine-resistant coronavirus variant.

Cruise operators Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise Line plunged more than 9% each, while shares in United Airlines, Delta Air Lines and American Airlines slumped almost 10%.

Ten of the 11 major S&P sectors dropped in early trading, with energy sliding 6.3% followed by financials and industrials. The domestically focused Russell 2000 small-cap index tumbled 3.6%, hitting its lowest level in over four weeks.

The S&P 500 banks index dived 5.1% as investors pared back bets of faster US interest rate hikes. Global stock markets sold off sharply after reports that the new variant was detected in South Africa, with scientists saying it has an unusual combination of mutations, may be able to evade immune responses and could be more transmissible.

The European Union, Britain and India were among places to announce stricter border controls. A top US infectious disease official said a ban on flights from southern Africa was a possibility.

“Equities are reacting negatively because it is unknown at this point to what degree the vaccines will be effective against the new strain, and thus it increases risk of new lockdowns which leads to an economic hit,” said Peter Garnry, head of equity strategy at Saxo Bank.

At 10:06 a.m. ET, the Dow Jones Industrial Average was down 906.49 points, or 2.53%, at 34,897.89, tracking its worst day since late October 2020. The S&P 500 was down 86.05 points, or 1.83%, at 4,615.41 and the Nasdaq Composite was down 214.71 points, or 1.36%, at 15,630.52.

The CBOE volatility index, popularly known as Wall Street’s fear gauge, jumped to its highest level since Sept. 20.

Elevated US inflation, coupled with strong economic data and the renomination of Jerome Powell as the Fed chair by President Joe Biden, had prompted market participants to raise their bets on early interest rate hikes next year, knocking US stocks off their record levels this week.

“(New variant news) seems to be a big catalyst adding some negativity into an already overvalued market looking for a reason to take a breather,” said Jeff Carbone, managing partner at Cornerstone Wealth. “Stay-at-home” names such as Netflix Inc, Peloton Interactive and Zoom Video Communications jumped between 1.3% and 8.4%.

The defensive healthcare sector outperformed, boosted by vaccine makers including Pfizer Inc and partner BioNTech SE as well as Moderna Inc which climbed between 7.3% and 21.9%.

Trading volumes are expected to be light in the short trading session as markets close at 1:00 p.m. ET, a day after the Thanksgiving holiday. Declining issues outnumbered advancers for a 7.68-to-1 ratio on the NYSE and a 5.17-to-1 ratio on the Nasdaq. The S&P index recorded six new 52-week highs and 19 new lows, while the Nasdaq recorded 12 new highs and 203 new lows.

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