The S&P 500, the Dow and the Nasdaq fell. The Dow Jones, a proxy for cyclical stocks, underperformed the other two major indices, dropping more than 400 points, or more than 1.2%, during the day on Tuesday. US crude oil prices (CL = F) fell 4%. And shares of airlines, cruise lines and accommodation companies believed to be most exposed to virus disruptions each sank early in the session to reverse Monday’s gains.
Investors reacted to Fed Chairman Powell’s final remarks to the Senate Banking Committee, in which Powell said the central bank could speed up its downsizing process to end earlier than previously wired amid mounting inflationary pressures . The comments came even as some other market participants expected the Fed to adopt a more accommodating tone for longer in the face of the recently discovered Omicron variant.
“At this point the economy is very strong and inflationary pressures are high, so it is appropriate, in my opinion, to consider concluding the reduction in our asset purchases, which we announced at the meeting. November, maybe a few months earlier, ”Powell said. “I think we’ll discuss this at our next meeting. ”
A host of new, less optimistic comments from major coronavirus vaccine makers also added to the selling pressure. Moderna (MRNA) CEO Stéphane Bancel told the Financial Times that the company’s current COVID-19 vaccine would likely see a “material decline” in its effectiveness against the Omicron variant, while noting that more data was needed to see the extent of the decline. Separately, Pfizer (PFE) CEO Albert Bourla told CNBC that he “doesn’t think the outcome will be that vaccines don’t protect,” but that “the outcome could be, which we don’t know. not yet, vaccines protect less. ”
Both companies have already said they are collecting data on the Omicron variant and more definitive information will be available in the coming weeks. Researchers have not yet determined whether the new variant is more easily transmitted, or responsible for more serious illness, than previous versions of the virus.
“Information arrives quickly, it evolves in real time. You can understand why investors [last week] were taking a little break, especially given the liquidity situation we had as the US holiday season approached, ”Vivek Paul, investment firm BlackRock UK, told Yahoo Finance Live on Monday .
“We think overall it would make sense to be invested in the markets right now,” he added. “It’s about understanding whether or not this is a delay, or a derailment, of the restart that we’ve seen. And it seems very likely at the moment – despite information to come – that it looks like a delay. “
The latest comment on the variant at least momentarily exceeded investor optimism over White House remarks on Monday, when President Joe Biden said Omicron was “not a cause for panic.” Biden said he intended to announce the White House’s strategy to tackle the coronavirus this winter later this week, and that plan would not include a lockdown, but instead focus on them. vaccinations, boosters and tests. The Centers for Disease Control and Prevention (CDC) updated their guidance on Monday to say that all people aged 18 and over “should” receive a coronavirus booster vaccine, reinforcing this from previous language aimed primarily at to ensure that those considered most at risk receive an extra dose of the beatings.
The prospects that widespread lockdowns are unlikely to come to the United States against the latest variant helped fuel a large risk rally on Monday. This was in stark contrast to actions taken on Friday immediately after the World Health Organization announced Omicron as a ‘worrying variant’, which triggered the Dow Jones’ worst plunge since October 2020.
“This is not a repeat of March 2020,” Paul Schatz, president of Heritage Capital, told Yahoo Finance Live on Monday. “It doesn’t look anything like March 2020, but it’s so recent in our history, people immediately think, ‘Omicron is here, oh my gosh it’s gonna be a 30% drop, we’re gonna go straight down.’ . You have to weigh the story the same way, not based on when it was in your memory. “
11:14 am ET: Inventory losses accelerate as Powell says cut could end “months earlier” than wired previously
The losses of the S&P 500, the Dow and the Nasdaq accelerated on Tuesday after Federal Reserve Chairman Jerome Powell said the reduction in Fed asset purchases could be accelerated to end “a few more months. sooner than expected.
The Dow Jones lost more than 400 points, or more than 1.2%. The S&P 500 and Nasdaq also lost more than 1.1% in intraday trading. The small cap Russell 2000 fell more than 2%.
In the S&P 500, the top 11 sectors were in the red, and the real estate, consumer discretionary and healthcare sectors underperformed. Materials company Dow Inc., Salesforce.com and American Express were the biggest laggards in the Dow Jones Industrial Average.
10:04 am ET: Consumer confidence falls short of estimates in November: Conference Board
Consumer confidence fell by a larger-than-expected margin in November compared to October, according to the Conference Board’s closely watched monthly index on Tuesday.
The overall confidence index fell to 109.5 in November, the Conference Board said. This missed consensus expectations for a drop to just 110.9, according to Bloomberg data. The October confidence index was also revised down to 111.6 from the previously reported 113.8.
The drop came as the sub-indexes tracing consumer ratings of both the current situation and expectations worsened from October.
“Expectations for near-term growth prospects have strengthened, but employment and income prospects have slowed. Concerns about rising prices – and, to a lesser extent, the Delta variant – were the main drivers of the slight drop in confidence, ”Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement. The proportion of consumers planning to purchase homes, automobiles and major appliances in the next six months has declined.
“The Conference Board expects this to be a good holiday season for retailers and confidence levels suggest that economic expansion will continue until early 2022. However, confidence and spending will likely face headwinds linked to rising prices and a potential resurgence of COVID-19 in the coming month, ”added Franco.
9:31 am ET: Stocks open lower amid virus fears
Here’s where the markets were trading right after the opening bell:
- S&P 500 (^ GSPC): -32.56 (-0.7%) to 4,622.71
- Dow (^DJI): -275.17 (-0.78%) to 34,860.77
- Nasdaq (^IXIC): -60.25 (-0.38%) to 15,723.28
- Brut (CL=F): -2.67 $ (-3.82%) to 67.28 $ per barrel
- Or (CG=F): + $ 11.20 (+ 0.63%) to $ 1,796.40 per ounce
- 10-year cash flow (^TNX): -8.6 bps for a yield of 1.443%
9:07 a.m. ET: Home price growth slowed more than expected in the United States in September
House price growth in the United States slowed in September, but remained high by pre-pandemic standards, with low interest rates and rising rents still fueling demand for the purchase of housing among buyers and driving up prices.
The S&P CoreLogic Case-Shiller National Home Price Index rose 19.5% in September from a year ago, compared to a 19.8% increase in August. The closely watched 20-City Composite Index, which tracks house price developments in 20 major US metropolitan areas, rose 19.1% year-on-year for September, also falling below the increase of 19.6 in August. And the 20-City Composite was also below analysts’ expectations for a gain of 19.3%, according to Bloomberg consensus data.
8:56 am ET: Markets “misinterpret Fed’s COVID response function”: strategist
According to at least one market expert, market participants are currently anticipating too much complacency on the part of the Federal Reserve in response to the latest concerns about the new Omicron variant.
“I suspect the rate market is misinterpreting the Fed’s COVID response function,” Neil Dutta, head of economics at Renaissance Macro Research, wrote on Tuesday. “Since the pandemic, each wave of COVID has had a smaller impact on the economy. For example, during the COVID wave that peaked in January, there was a significant slowdown in restaurant traffic.
“In the most recent wave, there was no slowdown. Also, as the Delta variant spread, the Fed ended up giving a strong signal to start shrinking in November, ”Dutta added. “So, I expect to see an unwinding of these recent market moves and I am skeptical that recent concerns about the coronavirus will spill over into deeper issues for the US economy. “
7:41 a.m. ET Tuesday: Stock futures crumble as Omicron worries reappear
Here’s where the markets were trading Tuesday morning:
- S&P 500 Futures Contracts (ES = F): -34.5 points (-0.74%), to 4,616.50
- Dow Futures (YM=F): -306.00 points (-0.87%), at 34,177.00
- Nasdaq Futures (NQ = F): -64.50 points (-0.39%) to 16,326.25
- Brut (CL=F): – $ 1.57 (-2.24%) to $ 68.38 per barrel
- Or (CG=F): + $ 7.70 (+ 0.43%) to $ 1,792.90 per ounce
- 10-year cash flow (^TNX): -9.1 bps for a yield of 1.438%
6:15 p.m. ET Monday: Stock futures hold gains
Here are the main movements in the markets at the start of the night session:
- S&P 500 Futures Contracts (ES = F): +9 points (+ 0.19%), at 4,660.00
- Dow Futures (YM=F): +78 points (+ 0.22%), at 35,155.00
- Nasdaq Futures (NQ = F): +29 points (+ 0.18%) to 16,419.75
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter