U.S. stocks dropped sharply on Friday as a new Covid variant found in South Africa triggered a global shift away from risk assets.

The S&P 500 lost 2.27% to close at 4,594.62.

The downward moves came after World Health Organization officials on Thursday warned of a new Covid-19 variant that's been detected in South Africa. The new variant contains more mutations to the spike protein, the component of the virus that binds to cells, than the highly contagious delta variant. Because of these mutations, scientists fear it could have increased resistance to vaccines, though WHO said further investigation is needed. On Friday, the WHO deemed the new strain a variant of concern and named it omicron.

Bond prices rose and yields tumbled amid a flight to safety. The yield on the benchmark U.S. 10-year Treasury note fell 15 basis points to 1.49% (1 basis point equals 0.01%). This was a sharp reversal, as yields jumped earlier in the week to above 1.68% at one point. Bond yields move inversely to prices.

Stock futures moved higher in early morning trading Monday following Friday’s big sell-off, as investors monitor the latest developments related to the Covid omicron variant.

The Nasdaq Composite slipped 2.2%. 

The variant was first reported to the WHO from South Africa and has been found in the U.K., Israel, Belgium, the Netherlands, Germany, Italy, Australia and Hong Kong, but not yet in the U.S. Many countries, including the U.S., moved to restrict travel from southern Africa.

On top of Covid developments, investors are also anticipating key economic data released this week.

The November jobs report on Friday is expected to show solid jobs growth. Economists surveyed by Dow Jones expect 581,000 jobs added in November.

The Institute of Supply Management manufacturing survey is released Wednesday and economists also expect strong results.