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Wall Street set to drop on fears over new coronavirus strain
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Wall Street set to drop on fears over new coronavirus strain

Wall Street's main indexes were set to fall from record levels on Monday, with travel stocks leading declines, as concerns over a new strain of the coronavirus in Britain prompted investors to lock in profits.

Business

(Reuters) -Wall Street’s main indexes were set to fall from record levels on Monday, with travel stocks leading declines, as concerns over a new strain of the coronavirus in Britain prompted investors to lock in profits.

The strain, which is said to be up to 70% more transmissible than the original, forced major European countries to shut their borders with the UK and sowed fears of further economic disruptions.

Airline stocks tumbled in trading before the bell, with United Airlines Holdings Inc, Delta Air Lines Inc and American Airlines Group Inc, falling between 3.7% and 4.4%.

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Cruise operators Royal Caribbean Cruises Ltd , Carnival Corp and Norwegian Cruise Line Holdings Ltd also fell between 5.8% and 7.6%.

“Profit-taking could be a part of it ... people get nervous because of the new strain. You’re seeing people reacting, rather than thinking first,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in New York.

The CBOE Volatility Index, also known as Wall Street’s “fear gauge”, jumped 29.7 points to its highest level since early November.

At 8:23 a.m. ET, Dow e-minis were down 508 points, or 1.69%, S&P 500 e-minis were down 70.25 points, or 1.9%, and Nasdaq 100 e-minis were down 150 points, or 1.18%.

U.S. congressional leaders were poised to vote on a $900 billion stimulus package to provide fresh aid to the virus-stricken economy. Optimism over the bill had seen Wall Street indexes reach record highs last week.

Goldman Sachs, Citigroup Inc, Morgan Stanley, Bank of America Corp and JPMorgan Chase & Co rose between 1% and 3.3% 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 gained 5.9% amid a series of price target hikes on the stock after the athletic apparel maker raised its full-year revenue forecast. The stock was among the biggest gainers on the Dow in premarket trade.

Electric-car maker Tesla Inc, which has soared more than 730% so far this year, slipped 4.5% ahead of its much anticipated debut into the benchmark S&P 500 index.

Lockheed Martin Corp fell 0.9% after it agreed to buy U.S. rocket engine manufacturer Aerojet Rocketdyne Holdings Inc for $4.4 billion. Shares of Aerojet Rocketdyne were up 25.7%.

Planemaker Boeing Co slipped 4.7% on a U.S. Senate report that Boeing officials “inappropriately coached” test pilots during recertification efforts.