Stocks sink as omicron, rate worries rattle Wall Street – Honolulu, Hawaii

Honolulu, Hawaii 2021-11-30 16:15:00 –

Update: 11:15 am

New York >> Wall Street losses worsened today after the Federal Reserve Chairman announced that he would consider stopping support for financial markets sooner than expected.

S & P 500 fell 1.9%. It was already depressed in the morning, with concerns that the Omicron variety could hurt the global economy.

Losses accelerated after Federal Reserve Chair Jerome Powell told Congress that the central bank would consider suspending bond purchases intended to lower long-term interest rates sooner than expected. Short-term government bond yields have risen as investors have raised expectations for the Fed’s rate hikes. Crude oil slid 5.4%.

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New York >> Already not nervous about the latest coronavirus The loss on Wall Street, a variant, was exacerbated today after the Federal Reserve Chairman said he would consider stopping support for financial markets sooner than expected.

The S & P 500 said in the afternoon after Federal Reserve Chairman Jerome Powell told Congress that the central bank’s monthly multi-billion dollar bond purchases could be suspended “probably months early.” The deal fell 1.7%. In June, the pace of consolidating purchases intended to worsen the economy by lowering interest rates on mortgages and other long-term loans was on the rise.

The end of the purchase will open the door for the Fed to raise short-term interest rates from near-zero, a record low. It will in turn dilute the major propellants that have sent stocks to record heights and shatter concerns about overly expensive markets. In response to Powell’s remarks, short-term government bond yields rose as investors raised expectations for the Fed’s first rate hike.

The Dow Jones Industrial Average fell more than three times in 30 minutes, accelerating stock price losses. As of 3:22 pm Eastern Standard Time, it was 34,525, down 603 points, or 1.7%.

The Nasdaq Composite index fell 1.5% and remained better than other markets. Rising interest rates tend to hurt stock prices the most, but they also hurt stock prices that are considered to be the most expensive and banks that will have the greatest profit growth in the future. Such companies play a bigger role in Nasdaq than any other index. Microsoft was down 1.6% and chip maker Nvidia was down 3.1%.

Interest rate hits came after stocks were already weak in the morning due to concerns about how badly the coronavirus’s rapidly spreading Omicron variant would hurt the global economy.

In an interview with the Financial Times, Moderna’s CEO predicted that the existing COVID-19 vaccine may be less effective at Omicron than previous variants. Regeneron also said today that its monoclonal antibody treatment may have reduced its effectiveness against omicron. Moderna’s share price fell 3.9%, while Regeneron fell 2.1%.

There are many undecided variants, such as how slow the already packed supply chain can be and how much it can keep people away from the store. That uncertainty sent Wall Street through jagged up and down shocks, as investors struggled to handicap how much financial damage Omicron would ultimately do.

Kristina Hooper, Invesco’s Chief Global Market Strategist, said: She said the market is likely to remain cautious “before we know more.”

The S & P 500 fell 2.3% on Friday with the worst loss in February, but rose 1.3% on Monday as investors revisited whether it was overreacting before giving way to today’s loss. bottom. The Benchmark Index is moving at a pace that concludes November with a loss of 0.6%.

One of the stock market tensions surged almost 19% after approaching that level from Friday, the highest since March. Much of the rise occurred after Powell started speaking.

Gold usually works well when concerns are rising among investors, but its price has fallen by 0.5%. Higher interest rates may reduce the attractiveness of gold that does not pay interest to its holders.

Crude oil prices have fallen due to concerns that the global economy, weakened by Omicron, will burn less fuel. Benchmark US crude fell 5.4% to its lowest level in three months. Brent crude, the international standard, fell 3.9%.

If Omicron ultimately causes enormous damage to the global economy, it can put the Federal Reserve in a difficult place. Central banks usually lower interest rates. This will allow borrowers to spend more and investors to pay higher stock prices.

However, low interest rates can also contribute to inflation, which is already at high levels throughout the global economy. Powell admitted in pre-parliamentary testimony that inflation was worse than the Fed expected and lasted longer. For months, authorities have described inflation only as “temporary,” but Powell said the term no longer works.

Subsequent stock losses were widespread, with almost all large-cap stocks in the S & P 500 falling.

The Russell 2000 Index fell 1.9% and small caps fell further. Investors usually see them hurt more than their bigger rivals by both higher interest rates and weaker US economies.

One sign of the bond market also highlighted concerns about the outlook for the economy. Long-term government bonds usually offer higher yields than short-term government bonds. This is to compensate for the increased risk that future inflation may cut into returns.

10-year Treasuries offer more yields than 2-Year Treasuries, but today the gap has narrowed sharply. Two-year yields rose from 0.51% at the end of Monday to 0.52%. Meanwhile, the 10-year yield fell from 1.52% to 1.44%.

Many investors believe that narrowing the gap means that bond markets are less confident in the long-term strength of the economy. If short-term yields reverse above long-term yields, many investors consider it a semi-reliable predictor of recession.

Stocks sink as omicron, rate worries rattle Wall Street Source link Stocks sink as omicron, rate worries rattle Wall Street

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