Stocks, oil prices and government bond yields slumped after South Africa raised the alarm over a fast-spreading strain of the coronavirus, triggering concern that travel restrictions and other curbs will spoil the global economy's recovery.

U.S. markets were closed for Thanksgiving on Thursday and ended at 1 p.m. Eastern Time on Friday, three hours earlier than usual, and bond market trading ends at 2 p.m., an hour earlier than is typical.

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The $Dow Jones Industrial Average(.DJI.US)$ fell 905.04 points, or 2.5%, to 34899.34. It was the Dow's biggest one-day percentage drop since October 2020.

The $S&P 500 index(.SPX.US)$ lost 106.84 points, or 2.3%, to 4594.62 and the $Nasdaq Composite Index(.IXIC.US)$ dropped 353.57 points, or 2.2%, to 15491.66. It was the worst Black Friday session on record for all three indexes.

What's driving the market?

It was an ugly day for stock investors during a thinly traded Black Friday session, which was susceptible to big swings on alarming news from public health officials who were assessing a new variant of the coronavirus that causes COVID-19.

Late in the session, the World Health Organization's technical advisory group assigned the B. 1.1.529 variant of the virus the Greek letter omicron and declared it a "variant of concern," as it did with the delta variant.

Fear of a new variant overshadowed the usual focus on U.S. Black Friday shopping day, which puts the focus on retailers as consumers shop for bargains.

Particularly notable about the variant is the "large number of mutations, some of which are concerning," the WHO group said in a statement. The mutations could make omicron more resistant to the current batch of vaccines.

The discovery of the new COVID strain was announced on Friday by South Africa's health minister Joe Phaahla. He said scientists were concerned because of its high number of mutations and the dramatic surge in infections the country had seen over the past four or five days.

"The pandemic and COVID variants remain one of the biggest risks to markets, and are likely to continue to inject volatility over the next year(s)," wrote Keith Lerner, co-chief investment officer and chief market strategist at Truist Advisory Services, in a Friday note. "It's hard to say at this point how lasting or impactful this latest variant will be for markets," the analyst wrote.

The omicron strain has been detected in Botswana and in Hong Kong in travelers who had visited South Africa.

"The one bull in the China shop that could truly derail the global recovery has always been a new strain of Covid-19 that swept the world and caused the reimposition of mass social retractions," said Jeffrey Halley, senior market analyst, at OANDA, in a note. "All we know so far is the B. 1.1.529 is heavily mutated but markets are taking no chances."

"Just when you thought Covid was being controlled in a holiday shortened week," said Sam Stovall, chief investment strategist at CFRA Research, in emailed comments.

Trading around the Thanksgiving holiday is often associated with lower trading volumes as traders typically wait until Monday to return to work. There was no U.S. economic data on the calendar for Friday.

After new cases stabilized at 200 a day, South Africa reported more than 1,200 on Wednesday and 2,465 on Thursday.

The U.K. government is banning flights from South Africa along with five other African nations, effective Friday.

"Predictably, energy, travel related and financials are the leading decliners and treasuries are rallying," wrote Jay Hatfield, CEO and portfolio manager at Infrastructure Capital Management, in emailed comments on Friday.

"It makes sense to have a market significant correction given the high level of uncertainty," the money manager wrote.

"At this stage very little is known," Deutsche Bank strategists, led by Jim Reid, told clients in a note. "Mutations are often less severe so we shouldn't jump to conclusions but there is clearly a lot of concern about this one. Also South Africa is one of the world leaders in sequencing so we are more likely to see this sort of news originate from there than many countries. Suffice to say at this stage no one in markets will have any idea which way this will go."

$Delta Air Lines(DAL.US)$, $United Airlines(UAL.US)$ and $American Airlines(AAL.US)$ all dropped 8% or more, after the U.K., Israel and Singapore restricted travel from southern Africa. The European Union said it would propose stopping air travel from the region. Cruise stocks including Royal $Royal Caribbean(RCL.US)$ were hammered, while $Exxon Mobil(XOM.US)$ fell 3.5%, or $2.23, to $61.25. $Chevron(CVX.US)$ fell 2.3%, or $2.68, to $114.51.

$Moderna(MRNA.US)$ rose 21%, or $56.24, to $329.63. $Pfizer(PFE.US)$ gained 6.1%, or $3.11. to $54. $Netflix(NFLX.US)$ and $DoorDash(DASH.US)$,which previously benefited from stay-at-home orders, rose 1.1% and 1.6%, respectively.