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Dow futures plunge nearly 700 points amid fears of new Covid variant found in South Africa.

In early morning trading on Friday, stock futures in the United States dropped as investors braced for a shorter trading day due to rising Covid fears over a new variant found in South Africa.

The Dow Jones Industrial Average futures lost about 650 points, or nearly 2%, while the S&P 500 futures fell 1.47 percent. Nasdaq 100 futures were also trading in the red.

The drop came as WHO experts warned on Thursday that a new Covid-19 strain had been discovered in South Africa. Due to the variant, the United Kingdom briefly halted flights from six African countries.

Bond yields have fallen as a result of the flight to safety. After rising above 1.65 percent earlier this week, the yield on the benchmark US 10-year Treasury note dipped to 1.5482 percent. Bond yields and bond prices are inversely proportional.

Oil prices fell as well, with US crude futures down 4.01 percent to $75.25 per barrel and the South African rand falling 1.69 percent to 16.2278 per dollar.

The Nikkei 225 index in Japan and the Hang Seng index in Hong Kong both fell more than 2% on Friday.

Markets were closed on Thursday for Thanksgiving, stocks are coming off of a slight rise on Wednesday that helped the S&P 500 and Nasdaq Composite halt their losses for the week.

This week, Treasury yields have risen, placing pressure on high-growth stocks. The Nasdaq has dropped 1.3 percent this week, while the S&P 500 has gained less than 0.1 percent and the Dow has risen 0.6 percent.

The market normally performs well in the last weeks of the year, with the so-called Santa Claus rally ensuring a nice holiday season for Wall Street. The S&P 500 has gained 25% so far this year.

Friday also marks the unofficial start of the holiday shopping season, with investors relying on Black Friday data to gauge consumer sentiment in the United States.

During this earnings season, retail stocks have experienced big movements in both directions. Gap and Nordstrom's stock dropped more than 20% on Wednesday, although Kohl's stock gained more than 10% a week ago after reporting strong sales growth.

During the quarter, retail leaders discussed how they are dealing with supply chain difficulties and inflation. It's also unclear whether the recent focus on supply chain issues has prompted people to start their holiday shopping earlier than usual, potentially hurting fourth-quarter sales.

Sarah Henry, a portfolio manager at Logan Capital Management, said, "I wouldn't be surprised if it was a dynamic around the holiday season." She went on to say that rather than betting on the best Christmas sales numbers, her firm was seeking for companies with long-term strategic benefits.

On Wednesday, numerous positive economic figures were released, including higher-than-expected personal incomes and consumer expenditure for October, as well as the lowest level of initial unemployment claims since 1969. The Fed's favoured inflation index, Core PCE, remained elevated at 4.1 percent.

On Friday, there are no noteworthy economic releases scheduled. Due to the holiday weekend, the stock market will close at 1 p.m. ET on Friday.