New COVID Variant on the Loose

Another new, dominant strain of the coronavirus is emerging. This is considered a variant of the Omicron variant, but it's considered more infectious than previous versions.

According to the U.S. Centers for Disease Control and Prevention (CDC), the new omicron variant - BA.5 is not only more contagious but prior infections and vaccinations are less helpful in combating the strain. Of course, there is much less buy-in with the public in terms of masking, lockdowns, and restrictions on activity.

Even in blue states and cities like Philadelphia and New York City, few people are masking in indoor places despite higher case counts, a new variant, and people spending more time indoors in air-conditioned places where transmission risk is higher. Another factor is vaccine efficacy is waning with people more than a year past their initial vaccination. And, there seems to be a limited appetite for another round of boosters.

In fact, it could be argued that now is the time to be masking even more than previous times when the government was mandating it because other people are being less cautious and the nature of this variant.

Currently, BA.5 now accounts for 54% of total cases in the U.S. with the previous dominant strain, BA.4 only making up 17%. BA.5 appears to evade protection from vaccines and previous infections and is estimated to be 3 times less sensitive to vaccines than the original Omicron variant.

The U.S. Food and Drug Administration (FDA) is expected to approve booster shots from Pfizer (NYSE: PFE) and Moderna (NYSE: MRNA) booster shots to target BA.4 and BA.5.

The most common symptoms of the new variant are runny nose, sore throat, headache, persistent cough, and fatigue. There is no evidence to show more severe outcomes in terms of illness or death. So, it's less severe than previous strains but more contagious as even people with previous exposure to Omicron could catch it.

With another wave of the coronavirus, it's not surprising to see vaccine and pharmaceutical stocks catch a bid. These are also liable to be in favor as long-term rates decline due to rising recession risk. Healthcare stocks see inflows under such circumstances as their earnings are less impacted by economic or monetary factors.