Gyrating markets reverse their early gains
Another roller-coaster ride on Wall Street whipsawed investors Wednesday as an early market rally reversed course by midafternoon, piling up more losses.
The S&P 500 had been up 1.9 percent in the early going following some better-than-expected readings on the U.S. economy, but the gains gradually gave way to a 1.2 percent skid. The afternoon reversal is the latest dizzying move for Wall Street’s benchmark, which sank 2.3 percent on Friday for its worst loss since February, only to then rise 1.3 percent on Monday and fall 1.9 percent on Tuesday.
The Dow Jones Industrial Average ended with a 1.3 percent loss, while the Nasdaq composite fell 1.8 percent. Both indexes had been solidly higher until the market’s afternoon swoon.
The wild movements are partly the result of investors struggling to handicap how much damage the newest coronavirus variant will do to the economy. Markets were already headed lower Wednesday afternoon when the White House announced that the first case of the omicron variant had been found in the U.S., in a person who recently had returned from South Africa.
“Investors are going to have to get used to the idea that this is not going to be the last variant,” said Liz Young, chief investment strategist at SoFi.
Another weight dropped on Wall Street on Tuesday when the head of the Federal Reserve said that it may halt its immense support for financial markets sooner than expected amid persistently high inflation sweeping the world.
But since climbing out of its early 2020 collapse caused by the first wave of COVID-19, one hallmark of the stock market’s powerful run has been the continued willingness by bargain-hunting investors to buy following any dip in prices. That lasting habit has helped the S&P 500 set 66 all-time highs so far in 2021, the second-most on record for a year, according to S&P Dow Jones Indices.
It also helped the Dow initially climb 520 points Wednesday. The blue chip index ended up dropping 461.68 points to 34,022.04. The Nasdaq slid 283.64 points to 15,254.05, while the S&P 500 fell 53.96 points to 4,513.04.
A report from payroll processor ADP said that non-government employers hired more people in November than economists expected. That could raise expectations for Friday’s more comprehensive jobs report from the U.S. government, though the ADP report doesn’t have a perfect track record predicting it.
A stronger economy would burn more fuel, and crude oil prices initially rose, briefly sending Benchmark U.S. crude 2.1 percent higher. But it shed those gains, closing down 0.9 percent at $65.57 per barrel. It momentarily dropped below $65 the day before.