[ad_1]
topline
Despite Wednesday’s higher opening, the stock market gave up earlier in the day gains and quickly turned negative after the Centers for Disease Control and Prevention reported the first case of the new Covid omicron variant in the United States, leading to a sale.
The Dow was up more than 500 points earlier in the day before closing in the red.
Key facts
The Dow Jones Industrial Average fell 1.3%, more than 450 points, while the S&P 500 lost 1.2% and the Nasdaq Composite 1.8%.
Despite starting the day strong, stocks turned negative — with the Dow giving up more than 500 points — after Dr. Anthony Fauci and the CDC confirmed the first US case of the new omicron variant in California.
The highly mutated variant has now been discovered in 24 countries, and some have already reinstated lockdowns – although the delta variant is still responsible for the majority of global coronavirus cases, according to the World Health Organization.
The bad news once again terrified investors. Stock market volatility has risen since late last week, when the WHO first labeled omicron as a variant of “worry” and the Dow plunged 900 points on the worst day of 2021.
Travel stocks led the declines on Wednesday, with stocks of airlines, hotels and cruise lines particularly hard hit.
Markets are also reacting to comments from Federal Reserve Chairman Jerome Powell a day ago, who said the central bank could soon tighten its accommodative monetary policy by accelerating the winding down of its pandemic bond-buying program.
Crucial Quote:
The omicron variant “is wreaking havoc on the markets,” said LPL Financial chief strategist Ryan Detrick. “A week ago, stocks were at record highs and the economy was strong. . . . Now we only have uncertainties and questions.” While he remains optimistic despite recent volatility, Detrick advises investors to “fasten their seat belts as the end of 2021 could be a bumpy one.”
Main background:
Investors are now increasingly concerned that the new variant could jeopardize the economic recovery in the US. Federal Reserve Chair Jerome Powell warned in his Senate comments on Tuesday, adding that omicron also further complicates the inflation outlook. Notably, the Fed chairman dropped the use of the word “transient” when describing inflation, a marked shift in tone, as he warned that elevated prices will now persist “well into next year.”
What to look out for:
While the S&P 500 is up nearly 25% so far this year, don’t expect the good times to continue into 2022, Wall Street analysts warn. While most experts predict that the benchmark index will rise slightly next year, many risks remain, including rising inflation, ongoing supply chain problems and tighter monetary policy by the Federal Reserve. Investors are likely to face below-average returns as a result, Wall Street’s largest companies predict.
Read further:
First case of Omicron variant discovered in California (Forbes)
Here’s What Wall Street’s Biggest Banks Are Predicting For Stocks In 2022 — And What To Look For (Forbes)
Stocks fall as Powell takes a rare pessimistic view on inflation amid Omicron variant (Forbes)
Dow plunges 650 points as Federal Reserve warns of Omicron impact (Forbes)
|
Sources 2/ https://www.forbes.com/sites/sergeiklebnikov/2021/12/01/stocks-plunge-again-after-cdc-confirms-first-us-case-of-omicron-variant/ The mention sources can contact us to remove/changing this article |
[ad_2]