NEW YORK, New York - Stocks sank Friday, with the Dow Jones Industrial Average briefly falling more than 1,000 points, as a new coronavirus variant first detected in South Africa appeared to be spreading across the globe. Investors were uncertain whether the variant could reverse months of progress at getting the COVID-19 pandemic under control.

The S&P 500 index dropped 106.84 points, or 2.3 percent, to close at 4,594.62. It was the worst day for Wall Street's benchmark index since February.

The index was dragged lower by banks, travel companies and energy companies as investors tried to reposition to protect themselves financially from the new variant. The World Health Organization called the variant 'highly transmissible.'

The price of oil fell about 13 percent, the biggest decline since early in the pandemic, amid worries of another slowdown in the global economy. That in turn dragged down energy stocks. Exxon shares fell 3.5 percent while Chevron fell 2.3 percent.

The blue chips closed down 905.04 points to end the day at 34,899.34. The Nasdaq Composite lost 353.57 points, or 2.2 percent, to 15,491.66.

Bond yields fall; banks hit

'Investors are likely to shoot first and ask questions later until more is known,' Jeffrey Halley of Oanda said in a report. That was evident from the action in the bond market, where the yield on the 10-year Treasury note fell to 1.48 percent from 1.64 perecnt on Wednesday. As a result, banks took some of the heaviest losses. JPMorgan Chase dropped 3 percent.

There have been other variants of the coronavirus - the delta variant devastated much of the U.S. throughout the summer - and investors, public officials and the general public are jittery about any new variant that's spreading. It's been nearly two years since COVID-19 emerged, killing more than 5 million people around the globe so far.

The economic impacts of this variant were already being felt. The European Union and the U.K. both announced travel restrictions from southern Africa on Friday. After the market closed, the U.S. also put travel restrictions on those coming from South Africa as well as seven other African nations.

A United Airlines passenger jet takes off with New York City as a backdrop.

Airline stocks quickly sold off, with United Airlines dropping 9.6 percent and American Airlines falling 8.8 percent.

'COVID had seemingly been put in the rear-view mirror by financial markets until recently,' Douglas Porter, chief economist at BMO Capital Markets. 'At the least, [the virus] is likely to continue throwing sand in the gears of the global economy in 2022, restraining the recovery [and] keeping kinks in the supply chain.'

Even Bitcoin got caught up in the selling. The digital currency dropped 8.4 percent to $54,179, according to CoinDesk.

In Nantucket, Massachusetts, where he is spending a holiday weekend, President Joe Biden said he wasn't concerned about the market's decline.

'They always do when there's something on COVID [that] arises,'' Biden said.

'Fear gauge'

One sign of Wall Street's anxiety was the VIX, the market's measurement of volatility that is sometimes referred to as its 'fear gauge.' The VIX jumped 53.6 percent to a reading of 28.54, its highest reading since January, before the vaccines began to be widely distributed.

Fearful of more lockdowns and travel bans, investors moved money into companies that largely benefited from previous waves, like Zoom Communications for meetings or Peloton for at-home exercise equipment. Shares in both companies rose nearly 6 percent.

The coronavirus vaccine manufacturers were among the biggest beneficiaries of the emergence of this new variant and the subsequent investor reaction. Pfizer shares rose more than 6 percent while Moderna shares jumped more than 20 percent.

Merck shares fell 3.8 percent, however. While U.S. health officials said Merck's experimental treatment of COVID-19 was effective, data showed the pill was not as effective at keeping patients out of the hospital as originally thought.

Investors are worried that the supply chain issues that have impacted global markets for months will worsen. Ports and freight yards are vulnerable and could be shut by new, localized outbreaks.

The U.S. dollar surprisingly lost ground against the majors, however, it advanced against the commodities bloc.

The euro surged to 1.1323 by the New York close Friday. The British pound appreciated to 1.3353. The Japanese yen was sharply higher at 113.13. The Swiss franc advanced to 0.92229.

The Canadian dollar slumped to 1.2786. The Australian dollar dived to 0.7134. The N ew Zealand dollar weakened to 0.6817,

Investors hit by major stock falls rushed into U.S. Treasuries, pushing the 2-year yield down from 0.64 percent to 0.50 percent.