U.S. stock indexes were trading sharply lower Monday morning, as the fast-spreading omicron variant of COVID-19 raised fresh questions about the outlook for the global economy.
How are stock indexes trading?
- The S&P 500 SPX, -1.57% traded 66 points, or 1.4%, lower to 4,556.
- The Dow Jones Industrial Average DJIA, -1.79% fell 583 points, or 1.7%, to 34,781.
- The Nasdaq Composite Index COMP, -1.50% declined 237 points, or 1.6%, to reach 14,934.
On Friday, the Dow dropped more than 500 points, or 1.5%, with the S&P 500 and Nasdaq Composite following it lower. For the week, the Dow lost 1.7%, the S&P 500 dropped 1.9% and the Nasdaq tumbled 3%.
What’s driving the markets?
Markets were slumping in the start to an abbreviated week of trading for most financial markets in observance of Christmas.
Worries about omicron, however, have sapped some of the joy out of the market for bullish investors, with lockdowns in parts of Europe weighing on sentiment.
News that President Joe Biden’s signature $2 trillion spending plan appeared doomed also was being greeted with selling. Sen. Joe Manchin, D-W.Va., said on Sunday that he cannot support it — potentially handing Biden and Democrats a major political loss.
Prompted by the political wrangling, Goldman Sachs downgraded their U.S. growth forecasts for 2022, citing difficulties in getting the spending bill passed.
Last week’s losses came as investors weighed the Federal Reserve’s hawkish pivot, speeding up its reduction of monthly bond purchases and predicting three interest-rate hikes next year.
“With flight to safety being the overriding concern, lower bond yields are questioning the FOMC’s ability to act as hawkish as they signaled last week. Markets are being challenged by a range of uncertainties at a time where thinner trading volumes ahead of the holiday period can exacerbate price swings,” said John Hardy, head of FX strategy at Saxo Bank, in a note to clients.
Need to know: These are the big levels to watch for the S&P 500 and Nasdaq. Expect ‘wild trade,’ if they break, warns this strategist.
Stock futures appeared to pare losses slightly after Moderna MRNA, +2.52% said its COVID-19 booster, when combined with two vaccines, offers 37-fold protection against the omicron variant.
That’s as new COVID-19 cases are growing sharply in many parts of the world, fueled by the rapid spread of that variant. Dr. Anthony Fauci said Sunday that he expects record cases of COVID-19 this winter, and urged people to get vaccinated and get boosters. The Netherlands began a lockdown that will last until mid-January and the U.K. hasn’t ruled out tighter pre-Christmas restrictions.
The World Economic Forum announced that its Davos meeting, which was due to be held in January, will be delayed to summer 2022, due to the spread of COVID-19. It’s the second straight year that the conference has been postponed.
Selling of perceived riskier assets extended to oil prices, which fell sharply on concerns of a growing hit to the global economy. Front-month West Texas intermediate crude CL.1, -5.02% fell 4.8% to $67.43 a barrel, while Brent crude BRN00, -4.22%, the global benchmark, lost 4.1% to $70.48 a barrel.
Which companies are in focus?
- Oracle Corp. ORCL confirmed on Monday a deal to acquire electronic-medical-records company Cerner Corp. CERN for more than $30 billion in cash.
- Shares of BP Midstream Partners BPMP surged 13% in premarket trading after energy giant BP said it has entered into a definitive agreement to buy the master limited partnership in an all stock-deal.
- Novavax shares NVAX rose 10% in premarket after the European Medicines Agency recommended granting Emergency Use Authorization for its COVID-19 vaccine.
- Moderna MRNA, +2.52% stock rose 7% in premarket trading after the pharmaceutical group said a booster shot of its COVID-19 vaccine provided 37-fold protection against the omicron variant when combined with two vaccine shots.
- Biogen BIIB, -0.40% shares gained over 2% after the biotechnology company said it would cut the price of its Alzheimer’s drug aduhlem by 50% starting Jan. 1 to about $28,200 a year
- Bluebird Bio BLUE, -19.30% shares were halted in premarket trading after the company announced a partial clinical hold for patients under 18 in sickle cell gene therapy program
How are other assets trading?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 1.380% fell about one basis point to 1.391%, according to Dow Jones Market Data. Treasury yields and prices move in opposite directions.
- The ICE U.S. Dollar Index DXY, -0.20%, a measure of the currency against a half-dozen other monetary units, was down under 0.1%.
- Gold futures GC00 for February delivery GCG22, -0.53% fell 0.4% to $1,797.60 an ounce.
- The Stoxx Europe 600 Index SXXP, -1.35% dropped 1.4%, while London’s FTSE 100 index UKX, -1.01% fell 1.1%.
- In Asia, the Shanghai Composite Index SHCOMP, -1.07% lost 1%, the Hang Seng Index HSI, -1.93% fell 1.9% in Hong Kong, China’s CSI 300 000300, -1.50% skidded 1.5% lower and Japan’s Nikkei 225 Index NIK, -2.13% dropped 2.1%.
