Wall St falls on Omicron, inflation fears

Wall St falls on Omicron, inflation fears

Wall Street's major averages has fallen more than one per cent after a morning rally faded as investor angst about the latest coronavirus variant soared with the first US case confirmation while the market also digested Fed comments on inflation.

After having advanced as much as 1.9 per cent by late morning on Wednesday, the S&P 500 gave up all its gains in the afternoon along with the Dow and Nasdaq, which fell the most on the day.

All three indices breached key technical levels during the session.

Late in the day, the US Centers for Disease Control said the country had detected its first case of the Omicron variant, which had infected a person who came from South Africa, where the variant was initially discovered.

Earlier on Wednesday, Federal Reserve chair Jerome Powell said policymakers needed to be ready to respond to the possibility inflation may not recede in the second half of next year as expected.

Wall Street had already tumbled on Tuesday after Powell had surprised the market by signalling the central bank would consider accelerating the withdrawal of its bond-buying program at its December meeting amid a surge in inflation.

Wall Street had tumbled sharply on Friday when investors first heard of the Omicron variant, with health officials saying they were unsure how transmissible or dangerous the variant was and how much protection existing vaccines provided.

On Monday, the market rebounded sharply as investors looked for bargains after the sell-off, only to fall again on Tuesday following the Powell comments.

“We tried to buy the dip again (on Wednesday) but news that Omicron is here already has taken some of the wind out of the sails of the bulls,” said Chris Zaccarelli the chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

The Dow Jones Industrial Average fell 461.68 points, or 1.34 per cent, to 34,022.04, the S&P 500 lost 53.96 points, or 1.18 per cent, to 4,513.04 and the Nasdaq Composite dropped 283.64 points, or 1.83 per cent, to 15,254.05.

While all of the 11 major S&P sectors were gaining into the early afternoon, all but one sector ended the day in the red. The communications services sector was the biggest loser, with a 1.99 per cent drop and consumer discretionary was not far behind with a 1.86 per cent dip.

The sole advancing sector was utilities, which tends to draw interest when investors are fleeing riskier bets.

Declining issues outnumbered advancing ones on the NYSE by a 2.26-to-1 ratio; on Nasdaq, a 2.96-to-1 ratio favored decliners.

The S&P 500 posted 13 new 52-week highs and 42 new lows; the Nasdaq Composite recorded 37 new highs and 541 new lows.

Trading volume was elevated with 14.2 billion shares changing hands on US exchanges, compared with the 11.3 billion average for the last 20 sessions.

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