Dow drops more than 600 points amid Omicron COVID concerns, Powell warning
Global stock markets tumbled Tuesday on fears that COVID-19’s new Omicron variant could wreak fresh havoc on the world economy.
The Dow Jones Industrial Average ended the day down 652.22 points, or 1.8 percent, after Federal Reserve chairman Jerome Powell warned the central bank will still discuss hastening the tapering of the bond-buying program at its December meeting, despite new threats posed by the Omicron variant.
The S&P 500 and the Nasdaq closed off by 1.9 percent and 1.5 percent, respectively.
In an appearance before the Senate Banking Committee, the Fed chief said the monthly bond-buying program could be wound down even faster than the $15 billion-a-month pace announced earlier this month.
“At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner,” Powell said. “I expect that we will discuss that at our upcoming meeting.”
Also contributing to Tuesday’s downturn were comments from Moderna CEO Stephane Bancel, who told the Financial Times that he expects existing vaccines to be less effective against the new variant.
He added that he doesn’t have the data on that yet, but speculated there could be a “material drop” in the current vaccines’ effectiveness against this variant.
Separately, Regeneron said the effectiveness of its monoclonal antibody treatment for COVID-19 may be reduced due to Omicron.
Tuesday’s tumble comes after all three indices finished trading higher on Monday as they recovered from Black Friday’s sell-off that saw the Dow fall more than 900 points.
The latest bout of frenzied trading followed a familiar pattern: so-called stay-at-home stocks like Peloton and Zoom gained while travel stocks and other companies with major exposure to the global economic recovery led the decline.
On Monday, President Joe Biden said economic lockdowns are off the table for now, and there will be no new travel restrictions.He also called the new variant a “cause for concern, not a cause for panic” and urged Americans to get vaccine booster shots.
Flanked by Vice President Kamala Harris and White House chief medical advisor Anthony Fauci, Biden acknowledged at his Monday news briefing that it would be “a few weeks before we know everything we need to know about” about the new variant.
“In the event, hopefully unlikely, that updated vaccinations or boosters are needed to respond in this new variant, we will accelerate their development and deployment with every available tool,” Biden said.The new COVID variant was first detected in South Africa and has since been found in more than a dozen countries, and spurred travel restrictions in many parts of the world.
The World Health Organization has designated Omicron a “variant of concern,” though officials have urged patience as scientists find more out about the variant.
