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Wall Street takes a tumble as fears over new coronavirus strain in the UK overshadow second US stimulus package

 Wall Street's main indexes took a tumble on Monday as the economy reacted to concerns over a new coronavirus strain spreading like wildfire in Britain.   

The S&P 500 lost 14.49 points, or 0.39 percent, by the closing bell, finishing at 3,694.91, while the Nasdaq dropped 13.12 points, or 0.1 percent, to 12,742.52. 

The losses were cushioned slightly by a 0.12 percent gain in the Dow Jones Industrial Average, which rose by 37.4 points to 30,216.45.  

Meanwhile the CBOE Volatility Index, also known as Wall Street's 'fear gauge', jumped 29.7 points to its highest level since early November before closing at 25.16. 

'The "Santa rally" will have to wait,' David Carter, chief investment officer at Lenox Wealth Advisors in New York, told Reuters. 'Troubling news about COVID in the UK has reminded markets that COVID isn't solved yet; the road ahead may be bumpy and uncertain.'  

Wall Street's main indexes took a tumble on Monday as the economy reacted to concerns over a new coronavirus strain spreading like wildfire in Britain

Wall Street's main indexes took a tumble on Monday as the economy reacted to concerns over a new coronavirus strain spreading like wildfire in Britain 

It was a busy day of trading, with plenty of forces pushing and pulling the market. Thin trading ahead of a holiday-shortened week may also be exacerbating moves, analysts said. Treasury yields were slipping, and crude oil prices also dropped amid worries about travel being curtailed around the world.

One big factor for the market was Congress, which finally appears set to act on a $900billion relief effort for the economy. House and Senate leaders are planning votes on the deal Monday, which would include $600 in cash payments sent to most Americans, extra benefits for laid-off workers and other financial support.

Economists and investors have been clamoring for such aid for months, and a recent upswing in momentum for talks had traders pushing up stock prices in anticipation of a deal. 


Analysts said some traders may be selling now to lock in profits, with the compromise all but assured and prices close to the highest they've ever been. Even after Monday's decline, the S&P 500 is back only to where it was earlier this month.

Across the Atlantic, negotiators blew past a Sunday deadline set for talks on trade terms for the United Kingdom's exit from the European Union. 

Investors have been fixed on the progress of those talks because a Brexit with no deal could cause massive disruptions for businesses on New Year's Day.

The S&P 500 was down 1 percent in early trading Monday, putting it on track to fall for a second day from its record set on Thursday

The S&P 500 was down 1 percent in early trading Monday, putting it on track to fall for a second day from its record set on Thursday

The Dow Jones Industrial Average was down 186 points, or 0.6 percent, at 29,993, as of 9.44am EST

The Dow Jones Industrial Average was down 186 points, or 0.6 percent, at 29,993, as of 9.44am EST

The Nasdaq composite was 0.9 percent lower in early trading Monday

The Nasdaq composite was 0.9 percent lower in early trading Monday

Monday was also the first day of trading for Tesla since joining the S&P 500 index. The electric-vehicle maker has surged so much this year, nearly 731 percent as of Monday morning, that some critics say its price doesn't make sense. 

But its inclusion in the benchmark index for Wall Street means index funds nevertheless poured tens of billions of dollars more into the stock. Tesla slumped 5.4 percent in early Monday trading.

The market's focus, though, was centered nearly 3,500 miles to the east of Wall Street, where UK Prime Minister Boris Johnson said Saturday that he was placing London and the southeast of England in a new level of restrictions after scientific advisers warned they detected a new variant of the coronavirus. 

There is no evidence that the new strain's mutations make it more deadly, but it seems to infect more easily than others.

Two COVID-19 vaccines have already been approved for the United States, and regulators around the world have also either approved or are considering usage of the vaccines. 

Hope that widespread vaccinations will help the economy return to some semblance of normal has been a big reason for Wall Street's return to record levels.

But for now, vaccinations are only for health care workers and other high-risk populations. It will be a while before a widespread rollout, and surging numbers of coronavirus counts and deaths are setting the global economy up for a bleak few months in the meanwhile.

The worries hit stock markets hardest in Europe, where France banned UK trucks from entering for a period of 48 hours. Other countries around the world also halted flights from the United Kingdom.

France's CAC 40 fell 2.9 percent, and Germany's DAX lost 2.9 percent. The FTSE 100 in London dropped 2.4 percent.

On Wall Street, stocks of energy producers had the sharpest losses on worries that travel restrictions will mean even fewer airplane seats filled and fewer miles driven by automobiles. Diamondback Energy dropped 6 percent and Occidental Petroleum fell 3.7 percent.

Travel-related companies were also hard hit. Cruise operator Carnival lost 3.1 percent, and American Airlines fell 3 percent.

In Asian stock markets, Tokyo's Nikkei 225 lost 0.2 percent after Japan's Cabinet approved a record annual budget of 106.6 trillion yen ($1.03trillion) for the coming fiscal year, which begins April 1.

Hong Kong's Hang Seng declined 0.7 percent, South Korea's Kospi recovered from early losses to gain 0.2 percent and stocks in Shanghai rose 0.8 percent.

The yield on the 10-year Treasury slipped to 0.92% from 0.93% late Friday.

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