Fed Chairman Jerome Powell said the U.S. central bank would consider accelerating the elimination of bond purchases as inflation risks increase. This further disturbed the threats that Omicron COVID-19 variant has already hit the markets.
Wall Street’s main indexes closed lower on Tuesday after Federal Reserve Chairman Jerome Powell said the U.S. central bank would consider accelerating bond purchases as inflation risks increase, accumulating pressure on the already nervous market about the latest COVID-19 variant.
Witnessing before the Senate Banking Committee, Powell stated that he no longer considers high inflation “transient” and that the Fed will review the timeline to reduce its bond-buying program at its next meeting in two weeks.
The S&P 500, which replaces the health of retirements and university savings accounts, lost 88.27 points, or 1.9 percent, to 4.567 points, while the Nasdaq Composite Technology Index lost 245.14 points, or 1.55 percent. , To 15,697.33. The Dow Jones Industrial Average fell 652.11 points, or 1.86 percent, to 34,483.72.
“Powell’s comments put a monkey in key market thinking in terms of potential taper time. As a result, you’re looking at risk,” said Michael James, managing director of stock trading at Wedbush Securities in Los Angeles.
“You also need to consider the concerns of the Omicron variant. You can argue that you have a higher risk or a higher risk of reality, but it still has a big impact on oil, and everything related to economic growth. ”
Powell’s comments also sparked speculation among some investors about the potential acceleration of the interest rate hike.
“The main driver of the fall in stock prices today is Powell’s comment about the Fed’s next meeting on accelerating the reduction in the bond-buying program, which he believes rate hikes will come sooner next year,” Mark said. Luschini, chief investment strategist at Philadelphia’s Janney Montgomery Scott.
“That change in tone captured the market,” Luschini said.
Meanwhile, the market could be a dangerous variant of Omicron, waiting for information on how much protection the current coronavirus vaccine could offer, and additional restrictions that could harm the economy, Luschini said.
Tuesday’s declines were very broad, with 11 major S&P sectors falling. Communication services were the main declines in the evening. As oil prices fell, energy also came under pressure throughout the session.
In Monday’s rally the shares regained a piece of land lost on Friday when the market reported news of the virus variant.
Although the U.S. Food and Drug Administration said it hoped to have information on the effectiveness of the current COVID-19 vaccines against Omicron, the vaccine companies appeared divided.
BioNTech CEO BioNTech and Pfizer COVID-19 vaccines are likely to provide great protection against serious diseases of the variant, and Moderna Inc. CEO told the Financial Times that COVID-19 vaccines are unlikely to be as effective as against the new variant. be earlier.
Shares of the modern fell on Regeneron Pharmaceuticals Inc. while it was also under pressure after being told that COVID-19 antibody treatment and other similar drugs could be effective against Omicron.
Travel and leisure stocks fell, and the S&P 1500 Airlines and S&P 1500 Hotel, Restaurant and Leisure indices fell due to concerns about further limit cuts.
The uncertainty of the virus has raised a new alarm at a time when supply chain blockages are growing in economic recovery and central banks around the world are anticipating a return to pre-pandemic monetary policy to deal with rising inflation.