Omicron could slow down the recovery but it could also stretch its length: J.P. Morgan's Manley
Stocks suffered their worst two-day selloff since October 2020 as traders assessed the latest developments on the spread of the omicron coronavirus strain, with the U.S. confirming its first case in California.
The S&P 500 erased gains after rallying almost 2 per cent earlier Wednesday amid strong trading volume. The technology-heavy Nasdaq 100 underperformed major benchmarks, with giants such as Tesla Inc. and Meta Platforms Inc. tumbling. Small caps, airlines, cruise operators and hotels also slumped.
South Africa said COVID-19 cases almost doubled from Tuesday, with the new strain popping up in the U.K., Switzerland and Brazil. The World Health Organization’s chief scientist noted that vaccines will likely protect against severe cases of the variant. Traders also assessed comments from Federal Reserve Chair Jerome Powell, who reinforced his message that the central bank would keep inflation in check and that officials should consider speeding up how quickly they withdraw support.
“‘Shutdown risk’ is the main reason, but there’s more at work,” wrote Adam Crisafulli, the founder of Vital Knowledge. “The rally this morning never had a lot of conviction behind it, and investors are still trying to sort through not just omicron but the Fed’s new reaction function too.”
The economy grew at a modest to moderate pace through mid-November while price hikes were widespread amid supply-chain disruptions and labor shortages, the Fed said in its Beige Book. Confidence among chief executive officers of large U.S. companies jumped to an all-time high, a measure of manufacturing rose in November, while data suggested employers continued to chip away at filling a near-record number of open positions.
Some corporate highlights:
- Moderna Inc. sank after losing an appeal of a patent ruling involving a rival’s drug-delivery technology, which could make its COVID-19 vaccine vulnerable to infringement suits.
- Salesforce.com Inc. slumped after the top maker of cloud-based customer-relations software gave revenue and profit forecasts that fell short of estimates.
- General Motors Co. expects to earn about US$14 billion in pre-tax profit this year, more than its previous guidance to Wall Street analysts, its chief financial officer said.
Some of the main moves in markets:
- The S&P 500 fell 1.2 per cent as of 4 p.m. New York time
- The Nasdaq 100 fell 1.6 per cent
- The Dow Jones Industrial Average fell 1.3 per cent
- The MSCI World index fell 0.3 per cent
- The Russell 2000 Index fell 2.3 per cent
- The Bloomberg Dollar Spot Index rose 0.1 per cent
- The euro fell 0.2 per cent to US$1.1312
- The British pound fell 0.3 per cent to US$1.3264
- The Japanese yen rose 0.3 per cent to 112.81 per dollar
- The yield on 10-year Treasuries declined three basis points to 1.42 per cent
- Germany’s 10-year yield was little changed at -0.34 per cent
- Britain’s 10-year yield advanced one basis point to 0.82 per cent
- West Texas Intermediate crude fell 1.5 per cent to US$65.17 a barrel
- Gold futures rose 0.2 per cent to US$1,780.50 an ounce