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The Dow Jones Industrial Average reported a sharp swing downwards, by nearly 1,000 points after the CDC confirmed the U.S. first Omicron coronavirus variant case.
The S&P 500 index fell by 53.96 points, or 1.2%, to close at 4,513.04 after hitting an intraday peak at 4,652.94. The Dow Jones Industrial Average dropped by 461.68 points, or 1.3%, to end at 34,022.04, after establishing a Wednesday peak at 35,004.64, up around 520 points. The Nasdaq Composite Index fell 283.64 points, or 1.8%, to reach 15,254.05 after registering an intraday peak at 15,816.82.
Wednesday’s drop indicates growing fears plaguing investors about the tenacity of the global economic recovery amid a new variant whose transmissibility is still being debated.
What had earlier seemed like a solid rebound turned into a steep fall after Dr. Anthony Fauci, President Joe Biden’s top medical adviser, said that the U.S. confirmed its first case of the Omicron variant of the coronavirus that causes COVID-19.
Fauci said that “the California and San Francisco departments of public health and the CDC have confirmed that a recent case of COVID-19 among an individual in California was caused by the omicron variant.”
The market maintained its bullish outlook even after Federal Reserve Chair Jerome Powell reiterated that the central bank might have to tighten financial conditions soon to combat surging inflation from new variants of COVID (such as Omicron) on Tuesday.
The ADP National Employment Report, released on Wednesday, showed that private payrolls climbed by 534,000 jobs last month. The figure was less than the 570,000 jobs in October, which had been revised down by 1,000, but Fauci’s announcement triggered a downfall.
Travel stocks were the biggest losers following news of the first case on U.S. shores of the variant whose occurrence has been reported in 23 countries. American Airlines, Delta Air Lines, and United Airlines all dropped more than 5% apiece. Boeing lost nearly 3%.
Meanwhile, safer bets like Treasuries have seen prices surge and yields fall as investors scramble for put options to protect themselves against falling stock prices. The U.S. 10-year Treasury rose as much as 9 basis points to around 1.5% earlier in the session on Wednesday but has since retreated to 1.45%.
Meanwhile, the World Health Organization (WHO) member countries voted on Wednesday to start a process to draft an international agreement to strengthen prevention, preparedness, and response for future pandemics, as more cases of the new variant of COVID-19, omicron, starts popping up worldwide.
(Inputs from CNBC)
Picture Credits: FT