Wall St ends lower as taper acceleration worries pile onto virus angst
(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)
By Devik Jain, Ambar Warrick and Sinéad Carew
Nov 30 (Reuters) - Wall Street's main indexes closed lower on Tuesday after Federal Reserve Chair Jerome Powell signaled that the U.S. central bank would consider speeding up its withdrawal of bond purchases as inflation risks increase, piling pressure onto a market already nervous about the latest COVID-19 variant.
In a testimony before the Senate Banking Committee, Powell indicated that he no longer considers high inflation as "transitory" and that the Fed would revisit the timeline for scaling back its bond buying program at its next meeting in two weeks.
"Powell's comments threw a monkey in the wrench in market thinking in terms of potential taper timing. You're seeing as a result of that, risk-off across the board," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
"You also have to factor in the Omicron variant concerns. You can argue whether they're more headline risk or reality risk but regardless, it's having a significant impact on oil, and everything that's tied to economic growth."
Powell's comments also prompted speculation among some investors about a potential acceleration in interest rate hikes.
"The principal contributor to the decline in stock prices today is the Powell commentary, regarding the upcoming Fed meeting, about accelerating the tapering of their bond buying program, which obviously leads to the prospect that rate hikes come sooner next year," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
"That somewhat hawkish shift in tone caught the market flatfooted," Luschini said.
Meanwhile, the market was also left waiting for information about how dangerous the Omicron variant might be, the degree to which current vaccinations could offer protection and the additional restrictions governments might have to impose that could hurt the economy, Luschini said.
According to preliminary data, the S&P 500 .SPX lost 87.25 points, or 1.87%, to end at 4,568.02 points, while the Nasdaq Composite .IXIC lost 239.43 points, or 1.52%, to 15,543.40. The Dow Jones Industrial Average .DJI fell 648.13 points, or 1.84%, to 34,487.81.
The declines were broad-based, with all the 11 major S&P sectors down. Communication services .SPLRCL was the lead decliner by late afternoon. As oil prices tumbled energy .SPNY were also under pressure throughout the session.
Tuesday's decline was a reversal after Monday's rally in which stocks regained some of the ground they had lost on Friday when the market first sold-off on news of the virus variant.
"The market is clearly in some treacherous waters right now. You've had two significant pullbacks out of the last three trading days. This is certainly shaking some of the complacent longs in the market," said Wedbush's James.
While the Food and Drug Administration said it hopes to have information about the effectiveness of current COVID-19 vaccines against Omicron, vaccine companies appeared divided.
BioNTech's 22UAy.DE chief executive said the BioNTech and Pfizer PFE.N COVID-19 vaccine will likely offer strong protection against severe disease from the variant, while Moderna Inc's MRNA.O CEO told the Financial Times that COVID-19 shots are unlikely to be as effective against the new variant as they have been previously.
Moderna shares fell while Regeneron Pharmaceuticals Inc REGN.O were also under pressure after it said its COVID-19 antibody treatment and other similar drugs could be less effective against Omicron.
Travel and leisure stocks slumped, with S&P 1500 Airlines .SPCOMAIR and the S&P 1500 Hotels, Restaurant and Leisure .SPCOMHRL indexes both declining on concerns of more border restrictions.
The small-cap Russell 2000 index .RUT also fell.
The virus uncertainty has triggered fresh alarm at a time when supply chain logjams are weighing on economic recovery and central banks globally are contemplating a return to pre-pandemic monetary policy to tackle a surge in inflation.
Meanwhile, data showed U.S. consumer confidence slipped in November amid concerns about the rising cost of living and relentless COVID-19 pandemic.
Reporting by Devik Jain and Ambar Warrick in Bengaluru; Editing by Marguerita Choy and Sriraj Kalluvila
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.