US Stocks Drop Nearly 500 Points After Omicron Case Emerges in California

The Dow Jones Industrial Index (DJI) fell 461.68 points at closing on Wednesday after the US Centers for Disease Control and Prevention reported the first case of the omicron COVID-19 variant within the states.

The collapse on Wednesday undid much of the 520-point gain the index saw earlier in the day. The S&P 500 fell by 1.2% as the Nasdaq plummeted by 1.8%.

Travel stocks were hit particularly hard following the news. Three US-based airlines, American Airlines, Delta Air Lines, and United Airlines dropped between 7% and 8% on Wednesday. Aircraft manufacture Boeing also saw a loss of 4.9%.

Cruise lines also bore the brunt of the news. Norwegian Cruise Line Holdings fell by 8.8% and Carnival dipped 7%. Two of the world's largest hotel groups also saw losses. Wynn Resorts sank by 6.1% and Hilton Worldwide dropped 3.8%.

The plunge wasn't limited to travel stocks with retailers also being hit hard. Nordstrom, Kohl’s, Best Buy, and Macy’s all dropped between 4% and 6% on Wednesday.

Steve Massocca of Wedbush Securities believes that the omicron news isn't the only factor causing the drop, he relayed to CNBC.

Massocca mused that, “I think a lot of it is tax loss selling. I think a lot of the poor names are doing worse because people are taking tax losses because they have so many gains elsewhere.”

The discovery of omicron, a highly mutated variant of covid first located in South Africa, has caused markets to swing wildly over the past few days. The Dow Jones dipped 905 points on Friday, the day after omicron was identified, only to rebound by 236.5 points on Monday. However, as omicron was detected outside of South Africa, it caused the index to dip an additional 652 points on Tuesday, before Wednesday's 461-point drop.