Dow drops 650 points on growing omicron fears, Powell taper comments
Stocks tumbled Tuesday, reversing Monday’s rebound on Wall Street, as investors reassessed risks associated with the new Covid variant, omicron.
Major averages dropped to their session lows after Federal Reserve Chairman Jerome Powell said the central bank will discuss speeding up the bond-buying taper at its December meeting.
The Dow Jones Industrial Average dropped 652.22 points to 34,483.72, dragged down by losses in American Express and Salesforce. The S&P 500 shed 1.9% to 4,567.00. The technology-heavy Nasdaq Composite dipped about 1.6% to 15,537.69. The small-cap benchmark Russell 2000 dropped 1.9% to 2,198.91 as economically sensitive names got hit hardest.
In an appearance before a Senate committee, the Fed chief said he thinks reducing the pace of monthly bond buys can move quicker than the $15 billion-a-month schedule announced earlier this month.
Powell’s comments suggest that the Fed’s focus has now changed to fighting inflation and its negative impacts rather than any more potential disruptions in economic activity from new variants of Covid.
Tuesday’s reversal also came after Moderna CEO Stephane Bancel told the Financial Times that he expects existing vaccines to be less effective against the new variant. The CEO told the newspaper there could be a “material drop” in the current vaccines’ effectiveness against this variant. Bancel told CNBC on Monday that it could take months to develop and ship an omicron-specific vaccine. Moderna dropped about 4.4%.
Separately, Regeneron said its antibody treatment may show reduced effectiveness against omicron.
Reference: CNBC
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