Monday’s rally saw stocks regain some of the ground they had lost on Friday when the market first sold off on news of the virus variant. As oil prices tumbled, energy was also under pressure throughout the session. Communication services was the lead decliner by late afternoon. Tuesday’s declines were broad-based, with all the 11 major S&P sectors down. Meanwhile, the market was also left waiting for information about how dangerous the Omicron variant might be, the degree to which current coronavirus vaccinations could offer protection and the additional restrictions governments might have to impose that could hurt the economy, Luschini said. “That somewhat hawkish shift in tone caught the market flat-footed,” Luschini said. “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 programme, 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. Powell’s comments also prompted speculation among some investors about a potential acceleration in interest rate hikes. 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.” “You also have to factor in the Omicron variant concerns. 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. “Powell’s comments threw a monkey in the wrench in market thinking in terms of potential taper timing. The Dow Jones Industrial Average fell 652.11 points, or 1.86 percent, to 34,483.72. The S&P 500 – a proxy for the health of retirement and college savings accounts – lost 88.27 points, or 1.9 percent, to end at 4,567 points, while the tech-heavy Nasdaq Composite Index lost 245.14 points, or 1.55 percent, to 15,537.69. In 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 programme at its next meeting in two weeks.
Wall Street’s main indexes closed lower on Tuesday after Federal Reserve Chair Jerome Powell signalled that the United States 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.
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