U.S. stocks slumped, joining a global decline as a new variant of the coronavirus in the U.K. and a wave of lockdowns and travel restrictions damped spirits.
The S&P 500 Index slipped about 0.5%, dragged lower by losses for Tesla Inc., which fell as much as 6% on its first day after being added to the U.S. benchmark. The Dow Jones Industrial Average edged higher as Goldman Sachs Group Inc. rallied after regulators approved a stock buyback. The yield on 10-year Treasuries retreated and the dollar climbed.
The weakness in U.S. markets was minor compared to the rout seen in Europe, where the Stoxx 600 Index slumped the most since October as Italy, the Netherlands, Belgium and France closed their borders to the U.K. Travel and leisure stocks were hard hit.
Bulls did have some reason for optimism, including progress on a $900 billion U.S. economic aid package. Pfizer Inc. and BioNTech SE’s Covid-19 vaccine also won the backing of a key European review panel, and a first wave of inoculations continued in the U.S.
Despite the positive developments, the emergence of the variant coronavirus strain in Britain put a damper on the return-to-work trade that’s lately taken hold. After global equities reached a record last week, traders pulled back to monitor the latest virus news.
“Fiscal stimulus is clearly fading as a catalyst, with Covid trends dictating the direction of markets,” said Emily Roland, the co-chief investment strategist at John Hancock Investment Management. “Risk assets had been shrugging off worsening virus trends, but are now showing some signs of vulnerability.”
The pound pared losses as U.K. Prime Minister Boris Johnson offered a fresh proposal to secure an 11th-hour trade deal with the European Union. Crude oil tumbled.