The S&P 500 and the Dow Jones rose, while the Nasdaq dipped into negative territory before recovering.
The Centers for Disease Prevention and Control said on Wednesday it had identified the first confirmed case of the Omicron variant in the United States.
Shares slashed earnings after CNN first reported the news around 1:45 p.m. ET, citing an anonymous person familiar with the matter. The United States has joined more than two dozen other countries in reporting at least one case of the Omicron variant, which was first identified last week by scientists in South Africa.
The latest development has rekindled concerns about the potential impact of the new variant on the national economy. A day earlier, 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 Omicron, but more data was available. still needed on the variant.
This comment, along with continued uncertainty about the transmissibility and severity of disease caused by the new variant, also contributed to the broader market decline seen on Tuesday.
“The market doesn’t like the information vacuum, and now we have two,” Thomas Hayes, Chairman of Great Hill Capital, Yahoo Finance Live said. “Not only did Moderna’s CEO express concern that his vaccines might not fully cover Omicron, but Powell then threw this… key into the mix during the hearing by saying we would speed up maybe. -be reduction in a few months. This is certainly no small feat, as the market had forecast over six or seven months that we would still get $ 660 billion in liquidity. “
Namely, Powell told the Senate Banking Committee that it would be appropriate for the central bank to consider completing its process of reducing asset purchases “a few months earlier” than previously wired. Market participants expected the Fed to take a more favorable stance for longer, especially given concerns over the latest variant of the coronavirus. But instead, Powell suggested his priority was to reduce persistently high inflation levels, and the Fed chairman added that it was “probably a good time to withdraw” his description of inflation as “Transient”.
“President Powell’s comment corrected the view on inflation and the potential need for faster policy adjustment,” Charlie Ripley, senior investment strategist for Allianz Investment Management, wrote in an email. “The reality is that higher inflation coupled with a strong economic environment could end the Fed’s bond buying program as early as the first quarter of next year. “
“Ultimately, the transitional view on inflation has officially come to an end as Powell’s comments reinforced the idea that high prices are likely to persist until next year,” he said. he adds. “With potential policy changes on the horizon, market participants should expect further market volatility in this uncharted territory. ”
12:55 p.m. ET: Bank stocks surge amid rising Treasury yields
Bank stocks surged on Wednesday afternoon as Treasury yields climbed as traders factor in expectations of an interest rate hike by the Federal Reserve next year after its buying process ends. of assets.
The two-year yield, sensitive to expectations of monetary policy changes, jumped around 5.5 basis points on Wednesday afternoon to hover around 0.58%. The benchmark 10-year Treasury bill yield increased 1 basis point to 1.45%.
The surge in Treasuries yields helped boost stocks of major banks, including JPMorgan Chase and Goldman Sachs, both of which are also constituents of the Dow. The KBW Regional Banking Index, an exchange-traded finance that tracks bank stocks, rose more than 3.4% for its best climb in a month.
10:05 am ET: ISM manufacturing index climbs to 61.1 in November, matching estimates
Manufacturing activity rebounded in November from October, although inflation concerns and other price pressures continued to weigh on goods-producing industries.
The Institute for Supply Management (ISM) November manufacturing index stood at 61.1 for the month, down from 60.8 in October. Readings above the neutral level of 50.0 indicate expansion in a sector.
Below the overall index, a sub-index tracking prices paid fell to 82.4 from 85.7 in October, but remains high from pre-pandemic levels amid persistent inflation. An employment tracking sub-index improved to 53.3 from 52.0 in October.
“The US manufacturing sector remains in a demand-driven and supply-chain environment, with some indications of a slight improvement in workforce and supplier delivery,” said Timothy Fiore, president of the Institute for Supply Management Manufacturing survey, in a press release. All segments of the manufacturing economy are affected by record times for raw materials and capital goods, continued shortages of lower-level critical materials, high raw material prices and difficulties in transporting products. “
“Global issues related to the pandemic – worker absenteeism, short-term closures due to parts shortages, difficulties filling vacancies, and overseas supply chain issues – continue to limit the growth potential of manufacturing, ”Fiore added.
9:32 a.m. ET: Stocks rise, S&P 500 and Nasdaq gain more than 1%
Here’s where the markets were trading right after the opening bell:
- S&P 500 (^ GSPC): +48.17 (+ 1.05%) to 4,615.17
- Dow (^DJI): +254.43 (+ 0.74%) to 34,738.15
- Nasdaq (^IXIC): +177.88 (+ 1.13%) to 15,712.72
- Brut (CL=F): + $ 2.30 (+ 3.48%) to $ 68.48 per barrel
- Or (CG=F): + $ 13.00 (+ 0.73%) to $ 1,789.50 per ounce
- 10-year cash flow (^TNX): +3.7 bps for a yield of 1.478%
8:22 a.m. ET: Private payroll increased more than expected last month: ADP
Private sector employment increased more than expected in November, suggesting a further improvement in the labor market recovery.
The US private sector payroll rose by 534,000 in November from October, ADP said in its closely watched monthly report. Consensus economists were looking for a private payroll increase of 525,000, according to Bloomberg data. The private wage bill rose by 570,000 in October, according to ADP’s revised monthly figure.
More data on the state of the labor market will be expected on Friday, when the Labor Ministry releases its “official” government employment report. Consensus economists are looking to see the non-farm workforce increase by 548,000 in November, accelerating modestly from the better-than-expected increase of 531,000 in October. ADP’s report has generally not served as a perfect indicator of what to expect from the government employment report due to differences in survey methodology.
7:24 a.m. ET Wednesday: Stock Futures Hold Gains, Dow Futures Gain Nearly 300 Points
Here’s where the markets were trading at 7:24 a.m. ET:
- S&P 500 Futures Contracts (ES = F): +55.75 points (+1.22%), at 4,622.00
- Dow Futures (YM=F): +293.00 points (+ 0.85%), at 34,750.00
- Nasdaq Futures (NQ = F): +236.00 points (+1.46%) to 16,386.50
- Brut (CL=F): + $ 2.96 (+ 4.47%) to $ 69.14 per barrel
- Or (CG=F): + $ 11.50 (+ 0.65%) to $ 1,788.00 per ounce
- 10-year cash flow (^TNX): +4.4 bps for a yield of 1.485%
6:15 p.m. ET Tuesday: Equity futures rebound
Here are the main movements in the markets at the start of the overnight session:
- S&P 500 Futures Contracts (ES = F): +22.25 points (+ 0.49%), at 4,588.5
- Dow Futures (YM=F): +92 points (+ 0.27%), at 34,549.00
- Nasdaq Futures (NQ = F): +93 points (+ 0.58%) to 16,243.5
Emily McCormick is a reporter for Yahoo Finance. Follow her on twitter